Once we have specified the assets that constitute the inheritance in Spain of the deceased person, as well as their value and added the value of the trousseau (and, if applicable, the additional assets), according to the explanation provided in previous posts, we must take into account the deductible charges or debts deductible from the assets of the inheritance in Spain. These are the charges and levies, debts of the deceased and deductible expenses, determined by tax regulations.
We can distinguish the following deductible values in an inheritance in Spain:
1. Charges and encumbrances
Spanish inheritance tax regulations state that only charges or encumbrances of a perpetual, temporary or redeemable nature that are directly established on the assets and actually reduce their capital and value, such as censuses and pensions, are deductible. Those that constitute a personal obligation of the acquirer and those such as mortgages in Spain and pledges that do not reduce the value of the transferred assets are not considered as such.
2. Debts of the deceased in Spain
1. The debts of the deceased person recognized by a final court decision may be deducted.
2. Other debts contracted by the deceased and evidenced by a public document.
3. Debts contracted by means of a private document that has been entered in a public register or handed over to a public official by reason of his office.
These debts may be deductible except for those in favour of the heirs or legatees of aliquots and the spouses, ascendants, descendants or siblings of the heirs, even if they renounce the inheritance.
3. Tax or social security debts owed by the deceased at the date of his death or arising after his death shall also be deductible.
4. Deductible expenses of an inheritance in Spain
1. Legal expenses in Spain or arbitration costs incurred as a result of litigation that may arise from the inheritance, whether testamentary or intestate, which arise in the common interest of all the heirs.
2. Expenses incurred by the heirs for the last illness are deductible from the inheritance in Spain, as long as they are justified.
3. Burial and funeral expenses in so far as they are justified and to the extent that they are in due proportion to the estate, in accordance with the customs and habits of each locality.
We have already determined the assets that make up the deceased’s inheritance, the assets that made up his or her estate during his or her lifetime, and at this point we have deducted those charges and encumbrances, debts of the deceased and a series of expenses that can be deducted, in accordance with the criteria established in the tax regulations in Andalusia.
Up to this point we have added up the value of all the assets and rights of the deceased (assets) and subtracted the encumbrances and obligations (liabilities).
As we can see in our scheme, once we have determined the assets that make up the inheritance in Spain (including household goods and, where applicable, the assets that can be added), having deducted the deductible expenses and debts of the deceased, we find what the tax regulations call the NET INHERITANCE IN SPAIN, which would coincide with the net estate in Spain to be distributed among all the heirs of the deceased, provided that there are no legacies in favour of specific persons other than those heirs, in which case we would have to deduct it from the estate and then distribute the estate among each of the heirs according to what the will states (if there is a will) or, failing that, the inheritance regulations.
At Welex, we advise you to count on the services of a lawyer specialised in debts or deductible charges of an inheritance in Spain to advise you on all the issues that may arise. Our team of professionals will be happy to assist you.