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How to process inheritances in Madrid after the recent tax change?

Recently, the President of the Community of Madrid, Isabel Díaz Ayuso, announced that the autonomous executive will extend inheritance tax benefits to taxpayers and bonuses. This means that the region is finally approaching the low taxation policies of other cities and countries such as Portugal, specifically Lisbon. In this sense, at least 11,500 taxpayers are expected to benefit from process your inheritance and succession in Spain with lower taxes. So those people who live abroad and have pending these inheritance processes in Spain, it is the ideal time to start them. Therefore, in this article we will explain you how to process inheritances in Madrid after the tax change.

New tax change in the Inheritance and Gift Tax rebate between siblings, aunts, uncles and nephews in Madrid

The new measure constitutes an increase of more than 10 percentage points in the tax rebate already stipulated in the law. And it has been approved by the Governing Council as a tax deduction bill that is part of the Strategy for the Protection of Maternity and Paternity, and the Promotion of Birth and Work-Life Balance. With this decision, family wealth is protected, so that if a nephew inherits the value of 100,000 he will have to pay around 13,239 euros, compared to the current 15,887 euros. Therefore, the local government expects to generate a tax saving of around 48.3 million Euros, which will allow the beneficiaries to process their inheritances in Madrid with lower taxes.

This measure will be effective as of January 1, 2023, and constitutes a step forward in the reduction of tax burdens for taxpayers.. Remembering that since the entry into force in 2006, of the 99% bonus for inheritances and donations between children, parents and spouses, the payment of these taxes has increased by 178% for inheritances and 1400% for donations between relatives. Therefore, it is a good option to seek advice from professional experts in inheritance in Madrid after the tax change, in order to evaluate the time lapses and documentation to start the process from 2023 and enjoy the benefits.

Documents required to process inheritances in Madrid

On the other hand, prior preparation is essential to be able to carry out the process quickly and effectively. So once the documentation is collected, have an inheritance lawyer evaluate the situation in order to proceed to execute the inheritance, or legally request extensions of time. Apart from the ownership documents, bank statements or other documents that support the value of the inheritance or donation, you must have the following requirements that are key to claim the inheritance in Madrid.

  •  Death Certificate: This document is usually provided by the funeral home, once it has been issued by the civil registry office closest to the place of death. Currently, it can be issued online and once obtained you must wait 15 days to request the last will certificate.
  • The certificate of last will and testament: This document is issued by the Ministry of Justice, at the Citizen's Attention Office. To process it you must pay the 790 fee and provide all the data of the applicant and the deceased along with the death certificate.
  • Insurance contracts for death coverage: This certificate is also obtained at the Citizen's Attention Office and the corresponding 790 fee must be paid. This document certifies whether the person left a notarized will or not. At the same time it reflects whether the deceased was insured with some type of death benefit. In case the deceased had a policy, the beneficiary has 5 years to make the claim.

Reading of the will and adjudication of the inheritance

Once these documents have been processed, it is time to proceed according to the inheritance conditions. That is to say, in case there is or there is not a will, different processes are done.

  • Processing of an inheritance without will or intestate in the Community of Madrid: In these cases a declaration of direct heirs must be made before a notary, and if the relatives are collateral, the declaration must be judicial. But in any case they need the National Identity Document (DNI) of the deceased, the death certificate, the family book and the certificate of last wills. Besides it is necessary the presence of two witnesses who know the deceased and who have no interest in the inheritance.
  • Processing of an inheritance with will in the Community of Madrid: If the deceased has left a will, the documentation focused on accrediting the assets and the value of the same is compiled. This valuation is provided by the notary's office, and must be presented together with the bank statements of the bank of the deceased.
  • Once these processes are completed, the application for the deed of manifestation and adjudication of the inheritance is made before the notary's office. In this act the percentage between each heir is established, according to the last will of the deceased or in equal parts, in case there is no will. Once the document is signed, the heirs automatically become owners of the assets.

Payment of taxes related to the processing of an inheritance in the Community of Madrid

After the above procedures have been carried out, the following taxes must be paid in order to make the inheritance effective in Madrid:

  • Inheritance tax: this tax must be paid within the first 6 months after the death. But it can be extended if it is requested at the General Directorate of Taxes in the 5th month after the death. In Madrid there are bonuses depending on the kinship of the heir, so there are cases in which the 99% bonus allows them to pay 1 out of every 100 euros they receive in taxes.
  • Capital gains tax: this tax is applied in case of inheriting certain types of assets such as real estate, and is paid at the town hall of the locality where the house or premises belong. In these cases there are also some bonuses that protect the family patrimony, so it is advisable to go to a lawyer with experience in inheritances in Madrid.
  • Other taxes: other tax expenses that may occur at the time of processing an inheritance are those incurred by the change of ownership of the assets, or the corresponding registrations.

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