Inheriting a house can be considered, at first glance, as a fact that benefits the successor's economy , by incorporating a property into his or her estate . However, the heirs must face the payment of a significant amount of money from the taxes that tax this type of mortis causa transmission.
Therefore, if you have just been the beneficiary of an inheritance, you must take into account the cost that accepting it will entail and assess whether you have sufficient liquidity to meet the expenses or, on the contrary, it is better to renounce it. In fact, according to statistics from the General Council of Notaries , during 2016, renunciations of inheritances affected 10% of cases, a percentage that in 2007 was only 3.4%.
However, there is good news for heirs. The Supreme Court recently issued a historic ruling that paves the way for many descendants to pay less to inherit a house . At Hipotecas.com we explain what changes this ruling introduces and how they can benefit you.
Expenses when inheriting a house
First of all, it is important to know that the inheritance of a property is taxed by two taxes :
- Inheritance and Gift Tax . This is a tax that falls under the jurisdiction of the autonomous communities, so each community is empowered to set the tax rates and applicable bonuses, causing significant differences between what some citizens pay and others depending on the geographical area. So much so that the Registry of Tax Advising Economists (REAF) estimates that inheriting in certain autonomous communities can be up to 1,000 times more expensive.
- The Tax on the Increase in the Value of Urban Land . The so-called municipal capital gains tax depends on the town councils and taxes the increase in the value of the land in each transfer - whether inter vivos or mortis causa - based on the cadastral value of the property. That is, it is applicable in the case of transfers of real estate through sale, donation or inheritance. In the first case, it is the seller who must pay the capital gains tax, while in the case of donation or inheritance, it is the beneficiaries who must pay the tax. As with the Gift and Inheritance Tax, here there are also major differences between the bonuses and rates set by the different town councils.
The Supreme Court ruling
Well, it is in this second municipal capital gains tax where the Supreme Court introduces the possibility of paying less when inheriting a house through ruling 1163/2018 , issued last July.
The resolution seeks to clarify the doubts raised last year by the Constitutional Court. Thus, in 2017, this judicial body declared the partial unconstitutionality of the municipal capital gains tax and the nullity of articles 107.1, 107.2 a) and 110.4 of the Local Tax Law, establishing that taxpayers should not pay the Tax on the Increase in Value of Urban Land when the sale, donation or inheritance of housing has generated losses.
For its part, the Supreme Court interprets these decisions of the Constitutional Court, annulling the precept of the law that prevented citizens from calculating whether or not there was an increase in the value of the property. That is, as a taxpayer, you can prove that you have not become richer by inheriting a house, thus being exempt from paying the capital gains tax to the corresponding city council.
Practical application of the resolution
How can you pay less when inheriting a house? Until now, the capital gains tax was calculated based on the evolution of the cadastral value of the property . From now on, regardless of this cadastral evolution, you have the possibility of proving that you have not obtained economic benefits from the inheritance of the property and, therefore, avoid paying the tax.
To do this, according to the Supreme Court ruling, you can use any type of evidence that shows this absence of profit , from notarial deeds , in the case of sales or exchanges, to the value of the property in the liquidation of the Inheritance and Gift Tax, in the case of inheritances.
Of course, paying less to inherit a house will depend, again, on the place where the succession takes place, finding three different scenarios :
- In Andalusia, Aragon, Castilla-La Mancha, Extremadura, Asturias and Cantabria it is possible to apply the Supreme Court ruling , since these communities use the cadastral value as a reference to calculate the capital gains.
- In Madrid, the Balearic Islands, Castilla y León, Murcia, Galicia and La Rioja, on the other hand, a calculation system based on average market prices is used, so in principle the court ruling would not affect you .
- In the case of Valencia and Catalonia, a mixed system is used, so you will have to wait for the case law to clarify how to proceed in these areas.