When we accept an inheritance we know that this also implies paying what is known as the Inheritance and Donations Tax, since it is understood that there is an enrichment. But, what happens if we find out by surprise of a millionaire heritage, but we cannot pay that tax, running the risk of losing the inheritance. This is what happened to Maxnce, who has inherited an apartment in the seventh district of Paris, one of the most sought -after areas of the capital.
To have more details, it must be said that this house is located on the left margin of the Seine River, where it has large avenues, as well as government and diplomatic institutions and sober residential buildings. But not only that, but also is located two streets of the most emblematic monument in the capital, yes, the Eiffel Tower.
You may be interested
A woman inherits part of her father’s company and the Treasury charges 1,638.14 euros more for the furniture for “domestic trousseau”: justice clarifies that the participations are not furniture from home
A man dies with a debt of 20,000 euros and justice condemns the children to pay it with interest, since they accepted it tacitly
According to several real estate portals, the square meter of a house in that city area is between 14,000 and 15,000 euros, so this floor is valued at about 2 million euros. Maxnce did not know, but the inheritance left her aunt grandmother, who died a couple of months ago and never met. But despite the millionaire inheritance, this has not been a surprise for him, he explains for the French magazine Capital.
Where is the problem? Well, the now heir has no money to face the payment of the Inheritance and Donations Tax. As in Spain, the percentage of this tax varies depending on the degree of kinship between the testator and successor, in which the higher the degree of consanguinity the greater the tax will be.
Up to 60% and only six months to pay it
The direct heirs, as children or parents, are the ones who pay less taxes and measure that the kinship moves away, the tax burden increases progressively until it even reaches 60% when there is no close relationship with the deceased. To this difficulty is added the short term that marks the law to pay the tax, this being only six months, a time too small for those who do not have immediate liquidity.
Given this situation, Maxnce has chosen to sell the apartment with the aim of paying off its debt with the Treasury and to be able to register the inheritance to its name. The problem is that the operation must be closed quickly, which could force him to accept a lower price than the real estate. In order not to be wrong at such a delicate moment, he has gone to the experts of the Capital magazine in search of guidance on whether it is now convenient to put the floor in the market.
More problems
Experts say that it is now a good time to sell, since the price of housing has increased (we can see it in Spain) and that the interests of mortgages have fallen until they are slightly above 3%. In addition, the type of housing, its location and value make the apartment a very attractive asset for international buyers that seek to invest in one of the most exclusive areas of Paris, although it is also, being such a high price, not any buyer can afford it.
Despite this, Maxnce has two problems. The first is time, since as we say this house is for very exclusive clients, so they usually demand procedures that require calm and guarantees. The second is uncertainty, since although the current market is favorable, nothing ensures that in a few months or years the sale could not be closed in better conditions.
To this is added a third problem, which is, as experts say, before being able to sell the house you must have paid the real estate tax, an expense that should keep in mind before setting the final price of the operation.
Inheritance Tax in Spain
In Spain, the Inheritance Tax applies to both inheritances and to donations and life insurance. The management and collection corresponds to each Autonomous Community, which causes differences according to each community, since each one can set their own reductions and bonuses. As in France, the percentage of the tax to be paid depends on the degree of kinship with the deceased, on the total value of inherited goods and the previous assets of the beneficiary. In general, tax rates range between 7.65% and 34%, although in communities such as Madrid, Canary Islands or Castilla-La Mancha, bonuses of up to 99% are applied for direct heirs, while in Catalonia children under 21 years enjoy reductions of up to 100,000 euros.
The maximum period to pay this tax is six months since the death, although you can ask for an extension of six others within the first five months, with delay interest. If it is not settled in the deadline, the debt prescribes at four years, unless Hacienda initiates a verification procedure. This regulation makes the tax one of the most unequal of the Spanish fiscal system, with very significant differences according to the place of residence of the deceased or heir.