10 tips about an inherited property with siblings in Spain

Piso o casa heradada por varios hermanos

Do you have a house or flat inherited by several siblings and are looking for more information on how to divide the assets? Whether you want to buy part of the siblings’ inheritance, see how to get your brother out of the family inheritance house or sell the flat between all of you… here we hope to clarify all these issues for you.

The loss of parents is a difficult time, when families come together to grieve and celebrate the best shared memories of their lives. A family home is not only a focal point in these memories, but it’s also the principal part of an estate – and the principal source of sibling disputes.

In Spain, figures from the nationwide organisation for consumers (OCU) found that 17% of inheritors had trouble with inheritance disputes in 2020.

The situation is worsened by outstanding debts, obligations and the taxes to pay when accepting an inherited property. According to the Spanish general council of notaries (CGN), since the COVID-19 pandemic at least 40% of inheritances have been renounced due to accumulated debts associated with accepting an inherited property.

Note that inheriting a property with siblings has two main stages: the acceptance of the inheritance; and the division of the inheritance.

It’s the second stage where the following problems can arise:

– Not all siblings may wish to sell the property.

– Not all siblings may wish to pay their division of property taxes, community bills, utilities and other maintenance costs as is required in a proindiviso (the term for a property owned by various parties, in this case siblings).

– Not all siblings may be in agreement to reform an inherited property for future sale (by the way, here is an article in which we talk about the advantages of buying a flat for refurbishment).

– Not all siblings may get along, complicating any agreements.

– The nature of a proindiviso means that no one party can force any other party to sell if they don’t want to.

Depending on the above factors, acquiring and selling an inherited property with siblings can be straightforward – or can be draining and take years to sort out.

Below we will cover the costs of acquiring an inherited property with siblings, the steps to acquire an inherited property and how to find solutions when siblings dispute an inherited property.

How much do you need to pay to inherit a property?

There are two main taxes to pay in order to accept the inheritance of a property:

1. Impuesto de Sucesiones

Spanish inheritance taxes range between 7.6% to 34% depending on the total value of the inheritance, including any properties, assets, cash and any other relevant goods of value. The amount of inheritance tax to pay also depends on the autonomous community in which the inheritance procedure is carried out – taxes are highest in Asturias, Castilla y León and the Valencian Community; taxes are lowest in Madrid, Galicia, Cantabria and Andalucia. In Madrid, for example, there is a 99% tax exemption when a spouse, child, grandchild, adopted child, parent or grandparent is receiving the inheritance. You can also deduct funeral costs and other relevant costs from the taxable base.

2. Plusvalía Municipal

The Spanish municipal surplus value tax is paid directly to the municipality where a property is located and separate to capital gains tax, which is declared in a tax return at the end of the year if you later sell the inherited property. The plusvalía municipal is typically calculated by multiplying the rateable value (valor catastral) of a property by a coefficient (between 0.14% to 0.45%) depending on how long the previous owner had the property.

Both inheritance tax and municipal surplus value tax must be paid within six months after the death of the owner. Failure to pay surplus value taxes will result in sanctions that can range between 50% to 150% of the outstanding debt.

Any notary costs, legal costs or costs of inscribing new owners into the local property register should be factored in when calculating the total cost of acceptance of a property inheritance.

Be aware, you will assume any debts (mortgage payments, unpaid property taxes, community bills, etc.) on the inherited property you acquire with siblings.

Concerning an inherited property with siblings, each of the above taxes and costs will be split according to the proportion granted to each party in the will or – in absence of a will – by inheritance law in the region where it is processed. In the absence of a will, the percentage of ownership of an inherited property depends on the grade of kinship with the deceased.

Note: you will need to pay taxes both to accept an inherited property with siblings as well as after selling an inherited property with siblings – after the sale, each will need to declare capital gains in their annual declaración de la renta (tax return) and pay the Impuesto sobre la Renta de las Personas Fisicas (IRPF, or income tax) following any applicable deductions and according to the percentage of the sale granted them.

Read more about selling an inherited property in Catalonia.

 

 

Four steps to inherit a property with siblings in Spain

1. Gather all the correct documents

Inheriting a property with siblings in Spain is finalised when you are all inscribed into the property register as co-owners – at least, all siblings who accept the inheritance.

To do this, you will first need to accept the inheritance before a notary. You will need the following documents:

Certificado de defunción

You can get the death certificate from the relevant Registro Civil (Civil Registry) in person, or online via this government link.

Certificado de últimas voluntades

This document confirms that a person has created a will, and must be signed before a notary. You can get this from the Ministry of Justice.

Testamento

The will, including the inventory of all assets and debts of the deceased. The will should also include details of the partition of assets including an inherited property. If there is no will, then an intestato (intestate) document must be created in which inheritance is awarded by kinship rank as dictated by law in the autonomous community where you reside. In this case, you will need to bring along birth certificates, marriage certificates and other documents which prove kinship.

 

2. Accept the inheritance of a property before a notary

At the notary’s office you will need to sign the acta de declaración de herederos, which is your declaration that you (and each of your siblings) know of no other eligible inheritors. From the date of signing this document there is an established waiting period of 20 days for the notary to declare who the inheritors are.

The notary will need to create the escritura de partición de la herencia which details the inventory of all the assets of the deceased, as well as the details of each inheritor and their corresponding proportion of the inheritance (including an inherited property).

Once this is done, you must sign the escritura de aceptación de herencia to accept your proportion of the inherited property. If a sibling does not want to accept their inheritance, the other siblings can have a notary send an acta de notificación. This sibling then has 30 days to determine their acceptance or renunciation of the inheritance. If they do not accept, it is assumed they accept by default.

A sibling may also accept the inheritance with the intention to later sell the proportion of their right to an inherited house to a third party or other sibling.

 

3. Pay taxes on the inheritance

As we have seen above, all siblings must liquidate the two taxes according to their proportion of the value of the inherited property:

  • Impuesto de Sucesiones: inheritance tax
  • Plusvalía Municipal: municipal surplus value tax

Bear in mind there may be costs if the inherited house has an outstanding mortgage on it. If the deceased had life insurance, many times this can pay off the outstanding debt.

Otherwise the new co-owners of the inherited property can take over the mortgage – either paying the outstanding debt or, once step 4 is complete, take over the mortgage payments.

There is the possibility to sell the house, pay off the outstanding mortgage debt, and then keep any left-over capital.

 

4. Inscribe the new co-owners into the property register

To formalise their co-ownership of the inherited property, each sibling should inscribe their name into the relevant property register.

Although this step is not obligatory, it is necessary if you wish to immediately sell the inherited property with your siblings. Since September 2021 it is possible to sell an inherited property in Spain without any delay – previously, the new owners and co-owners had to wait two years.

 

What happens if a sibling lives in the inherited property?

In many cases a sibling may be living in an inherited property prior to the death of a parent.

The situation can lead to immediate problems concerning an inherited property with siblings. Due to the new situation of proindiviso, all co-owners are now responsible to pay their proportion of utilities, maintenance costs and property taxes.

Many times the co-owner siblings are not content with one sibling living in an inherited property – without paying rent – while other siblings have a legal obligation concerning the costs of the property on top of their own living situations.

There are various solutions to a sibling living in an inherited property in Spain, and apply to a wide range of disputes concerning an inherited property with siblings:

Adjudicación de proindiviso

The simplest solution is to sell the inherited property with siblings and to split the proceedings according to the division set out in a testament or by relevant inheritance law. In cases where the inherited property is a building or large or luxury house, this could end up with the property being divided into separate properties. For help and advice selling a property in Barcelona don’t hesitate to contact BCN Advisors. You can read more about real estate commissions when selling a house in Spain here.

Adjudicación individual

If the sibling living in the inherited property wishes to remain and conserve the inherited property, they can become the sole owner. This could happen if the inheritance includes a property and additional capital, and where one sibling can inherit the house and give up rights to the capital in favour of their siblings.

La extinción de condominio

Each sibling could decide to extinguish their co-ownership rights and hand sole proprietorship to one sibling. The sibling retaining ownership can buy the shares to their sibling’s inheritance (e.g. three siblings have equal rights to a house worth €150,000, so one pays the other two siblings €50,000 each). This method has benefits as the sibling retaining sole ownership pays a low tax rate between 0.5% to 1.5% (impuesto de actos jurídicos documentados) depending on the autonomous community where the inheritance is processed.

La compraventa del proindiviso

Siblings can agree to sell their shares in the inherited property to one or more other siblings via the compraventa del proindiviso, i.e. as if it were a property transaction. This method will be much more costly to siblings retaining ownership of an inherited property as they will pay stamp duty taxes between 6% to 10% (impuesto de transmisiones patrimoniales) depending on the autonomous community where the inheritance is processed. A sibling may also sell their share in an inherited property to a third party, however the other siblings with co-ownership of the inherited property have the preferential right to buy this share at the same price. There is a 30-day period to execute this right from the date of notification of the compraventa. All co-owners could also agree to sell their shares to the inherited property to a third-party (e.g. an estate agent).

División de cosa común

This is often synonymous with the adjudicación de proindiviso, but also refers to the worst solution of all: the sale of a property by judicial auction and the splitting of proceedings according to the will or relevant inheritance law. The sale price of an inherited property by judicial means will almost always be lower than the market value of a property, and so is seen as a bad outcome. Any co-owner of an inherited property can start the judicial process, but it is typically a last resort when all other negotiations break down. It is advisable to contract a mediator to sort out any disputes concerning an inherited property by siblings before beginning judicial proceedings.

Desahucio

Co-owners can begin eviction proceedings if a sibling lives in an inherited property and refuses to leave. If the sibling lived in the inherited property prior to the inheritance process the correct channel will be to solicit a desahucio por precario. If the sibling moved in after the inheritance procedure the eviction will need to be filed in a civil court in Spain. In both cases, the eviction process can be successful on the grounds that no one co-owner has the right to use the inherited property without the consent of all co-owners – this is by virtue of the proindiviso.

 

FAQ: Everything to know about an inherited property with siblings in Spain

Can one sibling sell the whole property?

No. By virtue of the proindiviso, no co-owner can act without the consent of all co-owners, as the signatures of all is required.

This applies to the sale of an inherited property – all co-owners must be in agreement or the sale cannot go ahead. This situation is the same for anyone gifting the inherited property or mortgaging it.

Can a sibling sell their share of the inherited property?

Yes, a sibling can sell their share of an inherited property. This can happen after accepting an inherited property and before it is put up for sale – this process is called a compraventa del proindiviso and allows siblings to sell their shares to another siblings or to a third-party.

Can I buy the inherited house from my siblings or half of an inherited house?

If a sibling wishes to sell their share of an inherited property to a third-party, the other siblings have a preferential right to buy the share at the agreed price. The co-owners have this preferential right for 30 days after being notified of the intent to sell.

The cheapest solution for the co-owner seeking to become the sole owner of an inherited property is by a process called the extinción de condominio. In this case the cost of buying out the share can be the same, but the taxes paid will be between 0.5% to 1.5% rather than 6% to 10%, depending on the autonomous community in which the inheritance is processed.

Can a sibling refuse to sell their share of the inherited property?

Yes, a sibling can refuse to sell their share of the inherited property. In this case the sibling may wish to buy out the other siblings and gain sole ownership of the inherited property.

If siblings of an inherited property cannot agree on a solution, any of the co-owners can begin judicial proceedings to sell the property via public auction. This outcome is arguably the worst and not beneficial to any party.