When real estate is transferred, taxes are generated, both in inheritances and donations, which must be paid to the tax authorities. In the case of Inheritance and Gift Tax (ISD), the Autonomous Community of the Canary Islands is in charge.
The tax consists of an amount that is levied according to the increase in the amount that a taxpayer receives the inheritance or gift.
Find out what you need to know about Inheritance and Gift Tax in Fuerteventura, when, how and where to pay it.
How much inheritance and gift tax is paid?
The Inheritance and Gift Tax (ISD) in Fuerteventura is calculated by valuing the goods or rights received, subtracting the charges and encumbrances.
Both state and regional reductions are applied to the result.
The resulting amount must be taxed at the corresponding ISD tax rate according to the amount inherited, based on the principle of progressivity of the tax.
The total tax liability obtained is multiplied by the coefficient determined by law based on the degree of kinship and the previous patrimony of the person receiving the assets or rights for profit.
Deductions and allowances are applied, after which the total amount to be paid is calculated.
Inheritance tax is only paid and settled in Fuerteventura for inheritances valued at 300.000€, while others may apply certain reductions, according to certain situations and degrees of kinship.
From €300,000, the fee will be 10% for each €50,000 in the computation of the inheritance or donation. In the event that it exceeds 1.2 million euros, the right to any type of subsidy from the state or island government will be lost.
Allowances, reductions and exemptions
Progressive allowances are established in the tax rates depending on the amount of the inheritance, exempting inheritances received by each taxpayer with an amount of less than 300,000 euros.
Thus, the tax exemption for each taxpayer for inheritances and donations received is limited from 2020 to the first 300,000 euros. In all other cases, the operation is as follows:
- Between 300,000 and 350,000 euros there is a 90 percent tax credit.
- For each increase of 50,000 euros, a 10 percent less bonus is applied.
- Once the donation or inheritance exceeds 1.2 million euros, the tax credit disappears.
The 99.9% tax credit, regardless of the tax liability, applies only to descendants and adopted children under 21 years of age (Group I).
In transmissions by inheritance (mortis causa), descendants and adoptees over 21 years of age, spouses, ascendants and adoptive parents, (Group II) and brothers, uncles, aunts, uncles and nephews and nieces (Group III), 99.9% of the tax credit is paid up to 55,000 euros and, after that amount, according to a scale.
In transfers by donation (inter vivos), only group II is taxed according to the scale.
According to the degree of kinship between the acquirer and the deceased:
Group I, acquisitions by descendants and adopted children under 21 years of age:
- Children under 10 years of age: 100% of the taxable base, without the reduction exceeding 138,650 euros.
- Under 15 years of age and equal to and over 10 years of age: 100% of the taxable income, without the reduction exceeding 92,150 euros.
- Under 18 years of age and equal to and over 15 years of age: 100% of the taxable income, without the reduction exceeding 57,650 euros.
- Minors under 21 and equal and over 18 years of age: 100% of the taxable income, without the reduction exceeding 40,400 euros.
Group II, acquisitions by descendants and adoptees 21 years of age or older, spouses, ascendants and adoptive parents:
- Spouse: 40,400 euros.
- Children or adopted children: 23,125 euros.
- Other descendants: 18,500 euros.
- Ascendants or adoptive parents: 18,500 euros.
Group III, acquisitions by collaterals of second and third degree and by ascendants and descendants by affinity: 9,300 euros.
Group IV, acquisitions by collaterals of the fourth degree or more distant degrees and strangers: there will be no reduction due to kinship.
Improvement of the state disability reduction
Applicable to mortis causa acquisitions made by persons with disabilities (art. 20 bis Decreto-Legislativo 1/2009, of April 21) and compatible with that which may be applicable due to kinship.
In the case of acquisition by persons with physical, mental or sensory disabilities, with a degree of disability equal to or greater than 33% and less than 65%, a reduction of 72,000 euros is applied.
In the event that the degree of disability is equal to or greater than 65%, a reduction of 400,000 euros will be applied.
For the purposes of this reduction, the degrees of disability are those established in the general Social Security regulations.
Own reduction for mortis causa acquisitions by taxpayers over 75 years of age
In mortis causa acquisitions by persons 75 years of age or older, a reduction of 125,000 euros, provided for in Article 20 ter of Legislative Decree 1/2009 of April 21, 2009, applies. This reduction is incompatible with the disability reduction and compatible with the other reductions.
State reduction for mortis causa acquisition of the habitual residence
Reduction for the acquisition mortis causa of the habitual residence by the spouse of the deceased person or their descendants or adopted children, on which a reduction of 99% of the value of the home may be applied to the taxable base, with a limit of 200,000 euros for the joint value of the home, which must be prorated among the taxpayers in proportion to their participation.
This reduction may be applied to collateral relatives of the deceased who are over 65 years of age and have lived with the deceased for at least two years prior to his death.
When and where is the Inheritance and Gift Tax paid?
In the case of inheritance, it is settled in the autonomous community where the deceased resided, regardless of where the heirs live or the location of the property.
In the case of a home donation, the important thing is the location of the property.
The age of the heirs or the degree of kinship is another important factor, as indicated in the Group division.
The deadline for filing the inheritance tax self-assessment is six months from the date of death of the deceased or from the date on which the declaration of death becomes final.
Extensions may be requested as long as they are made within the stipulated time. This extension may not be for more than a couple of months.
Payment will be made as established by the liquidating body.
There are different ways to settle the payment, such as payment in installments, to facilitate the beneficiary’s acceptance of the inheritance and the payment of the tax.
Documentation to liquidate the inheritance and gift tax in Fuerteventura.
The tax is delivered in person or through the electronic office of the Government of the Canary Islands, with this documentation:
- Form 650 (inheritance) or form 651 (donations) duly completed and filled in.
- Copy of identification documents (ID cards).
- Certificate of last will or life insurance.
- Copy of the award of inheritance duly classified.
Esta información está disponible en / Post available in: Español (Spanish)