Sometimes inheriting a property can be great news. Other times, it can come with some complications. Often it can mean inheriting the mortgage too.
In Spain if you inherit a property, you also inherit the mortgage (and any other fees or debts it might have). Put simply, it means that you inherit everything, debts and all
Not only does the heir (or heirs) have to pay inheritance tax, known as ‘el impuesto de sucesiones‘, and capital gains tax on the property, but will become legally liable for the monthly mortgage payments.
What options do you have?
The first is to formally accept the inheritance and with it all the financial consequences. You’ll need to go to the bank to change the name and ownership of the mortgage, a procedure known as subrogación de deudor (debtor subrogation). The process basically means changing the name on the mortgage without changing the bank, the mortgage, or its conditions.
Another option is to reject the inheritance, though it should be noted that when you reject an inheritance you are rejecting all of it. You can’t reject just the mortgage and keep the property. This is an option if you can’t afford the mortgage payments.
Rejecting an inheritance is more common than you might think. In Spain the Covid-19 pandemic sent the number of property inheritances soaring to record levels: in March of 2020 alone a record 19,400 inheritances were recorded, 65% more than in 2019, according to data from Spain’s National Statistics Institute (INE).
But the sudden and unexpected rise in the death toll meant that many Spaniards were unprepared to inherit a property and were forced to reject the inheritance due to the mortgage or outstanding debts. In 2021 Spaniards renounced 40% of inheritances for, among other reasons, the accumulated debts they would also be forced to inherit.
Another option is to use other assets from the inheritance to pay off the mortgage if the will provides sufficient inheritance to do so. This would be an option if you’re inheriting money or shares as well as property.
If the mortgage will simply be too much of a financial burden to manage, another option is to sell the property. But there is a process for selling an inherited property in Spain. The first thing to do is formally accept the inheritance and get hold of the legal documents, in addition to paying the corresponding taxes.Once the property is registered in your name in the Registro de la Propiedad you can sell the property like any other.
If there are several heirs named in the will, the debt will be divided equally, according to the inheritance.
If you are looking to buy a property in Spain and need a mortgage, email email@example.com for the latest criteria.