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Learn the details about the growing increase in housing inheritance

According to data issued by the INE, the registration of home inheritance in the Property Registry between the months of January and May has broken a new record. A total of 85,186 transfers of home ownership by inheritance have been recorded in Spain as a whole. This is an average of 564 per day, the highest figure recorded in the historical series that began in 2007.

The latest data available indicates an increase amounting to 17,810 inherited properties in the month of May alone, the second highest monthly figure in history. It should be noted that this figure only includes the inheritance of accepted housing. The resignations produced due to the debt assigned by the inheritance are left out.

Herencia de vivienda

National ranking of communities with the most inheritance of housing

According to the analysis provided, the largest number of property registrations is located in Catalonia, with almost 15,000; in second place Andalusia with 13,902; Madrid with 11,176; Valencian Community with 11,115; Castilla y León with 5,324; and the Basque Country with 4,223. La Rioja became the only community where less than 1,000 homes have been inherited in the first five months of the year. Meanwhile, the autonomous cities of Ceuta and Melilla close the National Ranking with less than a hundred transmissions between January and May.

What is the inheritance process like and how long does it take?

Most of the inheritance transmission process is carried out at a notary’s office. This before being reviewed in a law firm or in an agency. There are companies in the real estate sector and agencies that are in charge of processing the home inheritance process. As well as its subsequent commercialization when the heirs make the decision to sell the estate. It is a procedure that saves time and money.

The duration of the process to legally acquire the inherited home is relative. This can take a few months or even years, depending on two fundamental factors: the possession or not of a will and the consensus between the heirs. However, before starting the transfer process, it is convenient to keep in mind the costs for taxes and the expenses to be faced once the inherited property is assumed.

What will be the taxes and expenses to assume a housing inheritance?

The main tax that must be assumed is the Inheritance Tax. It is a tax for the transfer of assets and rights between individuals that does not have a fixed amount. The value of the amount will depend on how much is inherited, with a tax ranging from 7.6% to 34%, with bonuses according to each Community.

According to the registered data, the highest amounts are registered in Asturias, Castilla y León and the Valencian Community; while on the other side of the table are the Community of Madrid, Galicia, Cantabria and Andalusia. In Madrid, for example, there is a discount of 99% of the tax in the case of direct relatives such as spouses, children, grandchildren, adopted children, adoptive parents, parents, grandparents.

Another tax to take into account is the municipal capital gain, which is paid whenever there is a change of ownership of a property. This is a municipal tax levied on the increase in value of urban real estate when a transfer takes place, taking into account its cadastral value. It is paid at the town hall of the town where the home is located, with a term of six months for disbursement and penalties for non-payment, which can range from 50% to 150% of the resulting amount.

To this tax must be added some additional expenses that the heirs must assume, such as the notary’s office, fiscal expenses or the Land Registry. On the other hand, and like any other property, an inherited home entails expenses such as insurance payments, the community and the IBI.

What will the tax change that will arrive in 2022 look like?

The BOE recently published the Anti-Tax Fraud Law, a regulation that changes the way of calculating the Inheritance and Donation Tax (ISyD), which corresponds to the tax paid by taxpayers who inherit a property. Although the heir will continue to pay taxes on the net value of the inherited home, it is established that in the case of real estate, the reference value will correspond to that approved by the General Directorate of Cadastre. This new value will be approved in December of each year, so it will foreseeably come into force in January 2022, affecting all inheritances that occur after this date.

What does this modification of the law mean for the inheritance of housing?

This new market value will be calculated from real estate transaction prices, according to information provided by Notaries and Registrars. Therefore, there will be no need to visit the property or to know its state of conservation, the materials used for its construction, or whether it has been renovated or not. This new value will affect not only the Inheritance and Gift Tax (ISyD), but also the ITP, the tax that is paid when buying a used home.

The regulations stipulate that the higher the valuation of the house that we inherit, the greater the amount of what we have to pay. The tax base of this tax will be the market value, and on that value the tax scale will be applied, which ranges between 7.65% and 34%, depending on the autonomous community where the property is located.

What happens if the taxpayer does not agree with the new reference value?

You must prove your error before the pertinent instances. The burden of proof, therefore, will fall on the taxpayer, who must demonstrate that the reference value of the Cadastre does not correspond to the market value.

The Treasury may request a “verification of values” of the inherited home if it considers that the heir has paid less taxes than what corresponds to him. The reason for this request lies in an erroneous estimate of the property established above the deeded price. This claim for the “extra tax” is known as “supplementary settlement for verification of values” and is also accompanied by the corresponding default interest.

How will the CCAA determine the value of an inheritance house?

As of January 2022, the new reference value will be approved by the General Directorate of Cadastre to motivate its value checks. However, to date, it is known that the Cadastre has not yet approved said reference value. The new law provides for this possibility by declaring that: “When there is no reference value or it cannot be certified by the General Directorate of Cadastre, the tax base, without prejudice to administrative verification, will be the largest of the following magnitudes: the value declared by the interested parties or the market value”.

What will the procedure be like before the new Cadastre reference value is implemented?

It is estimated that until the new Cadastre reference value comes into force, the legal forecast will remain incomplete. The rule provides that, in the case of real estate, the tax base will be said reference value. In the absence of said reference value, the Administration must resort to the greater of these two magnitudes: the value declared by the interested parties, or the market value.

The value checks carried out during 2021, once the Law on Measures to Prevent and Fight Tax Fraud has entered into force, must determine, for each property, what its market value is. This without being able to apply the legal presumption that said market value corresponds to the reference value of the Cadastre, not yet in force.

During the remaining months of this year, the valuations will also be carried out in correspondence with the usual process; that is, using any of the means provided for in article 57.1 of the General Tax Law. These may be challenged by taxpayers alleging that the methods used are not adequate to obtain the market value of the property, or denouncing, as the case may be, the lack of an expert visit to the property or the use of a means such as appraisal. mortgage.

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