In an inheritance, the value you declare does two things at once, and in opposite directions. It sets what you pay now in the Impuesto sobre Sucesiones (the inheritance side of Spain's inheritance and gift tax), and it sets the acquisition cost from which the gain will be worked out when the assets are sold. Declaring low to pay less today means signing up for a bigger bill tomorrow. This guide explains how each thing is valued and why the decision is not just about the current year.
What exactly the taxable base is
In acquisitions on death, the taxable base is the net value of each heir's individual acquisition: the value of the assets and rights that fall to that person, reduced by the charges and debts that can be deducted. It is not the value of the whole estate but what each person receives. Hence the weight of the division: two siblings who take the same in value can pay different amounts if one receives assets carrying a reduction and the other does not.
Real estate: the reference value rules
Since the 2021 reform, the taxable base for real estate is its valor de referencia, the reference value published by the Catastro, Spain's national land registry office, as at the accrual date, unless the value declared by the heirs is higher, in which case the declared value prevails. It is an administrative value that can be looked up on the Catastro's website using the cadastral reference and the date.
| Situation | Taxable base of the property |
|---|---|
| There is a reference value and it is higher than the declared value | The reference value |
| There is a reference value and the declared value is higher | The declared value |
| There is no reference value for that property | The higher of the declared value and market value |
If you declare less, the tax authorities assess the difference without needing to open a valuation review: by law, the reference value is the taxable base. What you can do is challenge it, but that is done afterwards and through the proper channel, not by declining to apply it.
How a reference value is challenged
There are two routes, and in both of them the burden of proof lies with the taxpayer:
- Declare the reference value, pay, and then ask for the self-assessment to be corrected, claiming a refund of the tax unduly paid. This is the clean route: it avoids any surcharge and keeps the argument focused on the value.
- Appeal against the assessment the tax authorities issue, if the region works on a system where the authority, not the taxpayer, calculates the tax.
In both cases the competent administration must request a mandatory report from the Catastro, which rules on the grounds put forward. What works is verifiable facts: a property in ruins, a flat with squatters, a plot burdened by easements, a cadastral floor area that does not match the real one. What does not work is the opinion that the neighbourhood is expensive. It is worth attaching a professional valuation, photographs, a technical report and, if there is one, the deed of a comparable sale. Nobody can guarantee the result: the Catastro report may confirm the value, and then what is left is the economic-administrative route, the appeal before the tax tribunals.
Accounts, securities and insurance: the snapshot is the day of death
Here there is no average balance and no fourth-quarter average: you declare the position on the date of death. The bank certificate you have to request must show, at that exact date:
- The balance of each account, with the holders and their percentages.
- The value of funds, shares and deposits, and interest accrued but not yet paid.
- Outstanding loans and the capital still owed.
- Whether there are safe deposit boxes.
Where the account is a joint account with another holder, only the part that belonged to the deceased according to real ownership goes into the estate, and that is not always an automatic half: it depends on where the money came from, and that has to be provable. It is one of the most common arguments with regional tax offices, especially when a son or daughter had been added to the account "to help with the paperwork".
Household contents
The law presumes that household contents (ajuar doméstico) form part of the estate and values them at 3 % of the value of the estate, unless the heirs assign a higher value or prove conclusively that they do not exist or are worth less. In 2020 the Tribunal Supremo, Spain's Supreme Court, narrowed the concept: household contents comprise movable goods for personal use or serving the home, and not money, shares, funds or financial assets in general. The practical consequence is that the 3 % is not calculated on the whole estate but on the assets capable of being household contents, and that clean-up lowers the base in estates where financial assets weigh heavily.
What comes off: charges, debts and expenses
| Item | Deductible? | Nuance |
|---|---|---|
| Charges that genuinely reduce the value of the asset | Yes | Ground rents and similar charges; not mortgages, which are debts |
| Debts of the deceased | Yes | Proven by a public document or in some other reliable way; debts owed to heirs, within limits |
| Costs of the last illness, burial and funeral | Yes | With supporting evidence and in proportion to the size of the estate |
| Litigation costs in the common interest of the heirs | Yes | If fully proven |
| Fees for administering an uncontested estate | No | They are part of the cost, not of the base |
The outstanding mortgage on a property is deducted as a debt of the deceased, not as a charge on the asset: the property goes in at its full reference value and the loan is subtracted afterwards. It looks like the same thing and it is not, when there are several heirs and the allocation is not proportional.
The detail nobody mentions: the future sale
For IRPF (Spanish income tax) purposes, the acquisition value of an inherited asset is the one that results from applying the inheritance tax rules, without exceeding market value. If you declared the flat at 120,000 euros and sell it for 200,000 euros, your gain is 80,000 euros; had you declared it at 160,000 euros, it would be 40,000 euros. In regions where inheritances between parents and children are heavily relieved, raising the declared value costs little or nothing in inheritance tax and saves a good deal of income tax on the sale.
The move is not automatic, nor always worthwhile: you have to look at the inheritance tax it generates, the plusvalía municipal (the local tax on the increase in urban land value, which on inheritances also depends on the value), the real likelihood of selling and the timescale. But it is a calculation that has to be done before filing, because afterwards it cannot be redone without correcting the self-assessment and justifying the change. When the sale comes, the calculation of the gain is in how the real gain is worked out.
Assets valued differently
- Unlisted shares: declared at their real value. In practice you start from book value and adjust it, and the tax authorities can check it using the means listed in article 57 of the Ley General Tributaria, Spain's General Tax Act.
- Vehicles: there is an official table of average sale prices, reduced by age, which serves as a reasonable reference.
- Usufructs and bare ownership: transfer tax rules. A lifetime usufruct (life interest) is calculated using the age of the holder; a fixed-term one, by years.
- Life insurance: the capital received by the beneficiary, which is added to the rest of that person's share of the estate when the policy comes from a contract taken out by the deceased.
The allocation is not neutral
Valuing is one thing and dividing is another. If the heirs take assets worth more or less than their share and settle the difference in cash, an excess of allocation (exceso de adjudicación) may arise that is subject to the Impuesto sobre Transmisiones Patrimoniales, the transfer tax, unless it fits one of the indivisibility cases the rule excludes. That is why an apparently simple division (the house for one, the money for the other) becomes more expensive if the values do not match. It is worth simulating the allocation with the final values before signing the deed, not after.
The valuation review and the technical way out
When there is no reference value and the tax authorities do not accept the declared value, they can open a valuation review using the means in article 57 of the Ley General Tributaria, with reasons that must be specific to the case: an appraisal made without visiting the property, or that does not explain why it departs from the declared value, can be appealed. Against the administrative valuation there is also the Tasación Pericial Contradictoria, a second, adversarial valuation that suspends enforcement of the assessment and sets the administration's valuer against the taxpayer's, with a third valuer if the gap is large. It has a cost and does not ensure a better outcome, so the decision is taken with the disputed figure in front of you.
If you would like us to review the valuation before filing, send us the inventory through the inheritance and gift form. We look at the reference value of each property, the clean-up of household contents, the deductible expenses and, above all, the effect of each figure on a future sale. We will tell you what is defensible and what is not; what we will not do is promise that a tax administration will accept a value that cannot be supported with documents.