Britons can avoid Spanish inheritance tax
Britons investing in Spain need to be more aware of the potential inheritance tax bills they incur, according to a specialist in the country.
Ailse MacFarlane of Spanish Living Group has warned that inheritance tax of up to 81.6 per cent could be levied on expatriates living in Spain, although the tax can be avoided.
Ms Macfarlane said that although rates are generally between 7.65% and 34%, "if the inheritor is not a close relative of the benefactor then the tax can be increased to a top rate of 81.6%".
However, by releasing equity from their property, Britons could pass more money to inheritors.
Ms Macfarlane said: "You use the property as security for a loan or a mortgage and basically use it as collateral for a loan of up to 80% of the current market value. You then invest that released capital into an offshore bond to generate profits.
"So basically, for a property worth about �,000 your inheritance tax could be reduced by nearly 󌍤,000."
Despite the potentially high level of inheritance tax, regulations were recently made more favourable for foreign investors as capital gains tax for non-Spaniards was slashed from 35% to 18%.
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