Postby AGoodman » Mon Aug 20, 2018 3:35 pm
IHT is charged on the estate rather than the heirs.
The basic process is to work out the value of the estate including any substantial gifts made within the 7 years prior to death. It sounds as though there are four potential deductions you can make:
1. Father's nil rate band of £325,000
2. Assuming he was a widower, any remainder of his late wife's nil rand band. If she left everything to him then this may also be £325,000.
3. The residential nil rate band of £125,000
4. Probable transfer of another £125,000 if he was a widower and his home was worth at least £250k.
Items 3 and 4 would be reduced if mother or father's estate were in excess of £2m. Seek advice.
Total possible nil rate band is currently £900k. The estate must pay 40% IHT on the balance but can pay the tax on land by way of 10 annual payments or when the property is sold.
You should get a credit for Spanish tax payable on Spanish property to set against the UK tax. It is UK unilateral relief rather than the result of a treaty.
I've assumed that father was either UK domiciled or deemed domiciled as a result of being UK resident for 15 years.
You should get a UK solicitor but will also need a Spanish lawyer (or possibly notary) to deal with the Spanish property.