The three Ortega siblings inherit from their mother a country house in Jerez de la Frontera with a reference value of 450,000 € and an account with 12,000 €. None of the three has enough savings to pay their share of the tax, which on the State scale comes to around 19,000 € each. One wants to sell straight away; another wants to keep the house. While they argue, the bank will not let them touch the account and the six-month deadline is running. There are ways out, but they come in an order.
First step: know how much has to be paid and when
Before looking for money, pin down the figure. With the State scale and reduction in Law 29/1987, the law on the Spanish inheritance and gift tax (ISD), and without regional reliefs:
- Each sibling acquires 150,000 € of the house and 4,000 € of the account: 154,000 €.
- Kinship reduction (group II): 15,956.87 €. Net taxable base: 138,043.13 €.
- Tax: 15,606.22 € + 18.7 % of 18,285.46 € = 19,025.60 € per sibling.
- Total for the family: 57,076.80 €, against 12,000 € of cash in the estate.
The rules of the applicable autonomous community (Spain's regions) may reduce that figure a great deal; it is the first thing to calculate, because sometimes the cash problem disappears once the correct rules are applied. See which autonomous community applies.
Second step: free the deceased's own money
Article 32.4 of Law 29/1987 prevents banks from handing balances over to the heirs unless payment of the tax or an exemption is proven. That is why the account is blocked.
The way out is in article 89 of the tax's Regulations: a partial self-assessment on account, with the agreement of all the heirs, for the sole purpose of withdrawing money on deposit, collecting life insurance or debts owed to the deceased. It is calculated on the value of those assets, without reductions, with the scale and the minimum coefficients, and what is paid is deducted later from the full self-assessment. With it, the siblings can access the account and use those funds for the rest.
In practice, many banks also accept that payment of the tax be charged directly to the deceased's account with the signature of all the heirs. If the bank allows it, it is the most direct route; it is best to ask for it in writing.
Third step: buy time with the extension
If the solution involves selling an asset, six months may be too short. Article 68 of the Regulations allows six more months to be requested, always within the first five months after the death. It carries late-payment interest from the end of the ordinary deadline, but it avoids surcharges. It is explained in how long I have to settle an inheritance.
Selling an inherited house shortly after the inheritance does not usually produce a significant gain for income tax (IRPF): the acquisition value is the one declared for inheritance tax (article 36 of the Income Tax Act, not exceeding market value) and, if it is sold for a similar price, the difference is small. There is, however, the municipal plusvalía on the inheritance (a local tax on the increase in value of urban land) and, if the seller were non-resident, further obligations.
Fourth step: defer or pay in instalments
Law 29/1987 has its own deferral rules for inheritances, in addition to the general ones:
| Route | What it allows | Conditions | Legal basis |
|---|---|---|---|
| Deferral by the managing office | Up to one year | Estates without enough cash or easily realisable assets; request before the payment deadline ends; late-payment interest | Art. 38.1 LISD |
| Instalments granted by the managing office | Up to five annual payments | Same cases, with security | Art. 38.2 LISD |
| General scheme | Instalments under the General Collection Regulations | Request on time; security depending on the amount | Art. 37 LISD and art. 90 RISD |
| Deceased's habitual home | Five years' deferral without interest, then ten half-yearly instalments with statutory interest | Spouse, ascendants, descendants or a collateral relative over 65 who lived with the deceased; sufficient security | Art. 39.3 LISD |
| Family business | The same scheme of five years plus ten half-yearly instalments | Business or shareholdings exempt from wealth tax | Arts. 39.1 and 39.2 LISD |
LISD is the inheritance and gift tax law and RISD its Regulations. For self-assessments, article 90 of the Regulations refers to the General Collection Regulations and, where the managing office is competent, allows deferral to be requested within the first five months. If it is refused, the payment period is deemed extended by the days that have passed, with any interest due.
An example of instalments under article 38.2. The sister who wants to keep the house asks to split her 19,025.60 € into five annual payments: five payments of 3,805.12 € plus the late-payment interest on each instalment, and she provides security. It is granted because the estate does not have enough cash to cover the tax. Her brothers, who will sell their share, ask only for the extension.
Both the deferral in article 38 and that in article 39 must be requested before the payment or filing deadline expires. A request made afterwards arrives with the debt already overdue: there will be a surcharge under article 27 of the General Tax Law and, if it is not paid, enforcement. And a deferral that is granted and then not paid opens enforcement proceedings against the security.
What cannot be done
Paying with the house itself. Article 36.3 of Law 29/1987 only allows payment in kind with assets of the Spanish Historical Heritage entered in the relevant registers. An ordinary home cannot be used to pay the tax.
Not filing because there is no money. Filing the self-assessment on time without paying, together with a deferral request, is very different from not filing. The first shows the debt and asks for time; the second piles up surcharges and can end in a penalty.
Waiting for the authorities to assess. The region or the State eventually learns of the death through the Civil Registry and the notaries. An assessment issued by the authorities comes with interest and, where applicable, a penalty.
The recommended order
- Calculate the tax under the correct rules.
- Free the deceased's cash (partial self-assessment or payment charged to their account).
- Decide whether anything needs to be sold and, if so, request the extension before the fifth month.
- For whatever is not covered, apply for deferral or instalments on time, using the special route if there is a habitual home or a family business.
- Always file on time, even if it is with the deferral request.
For the general rules on deferring tax debts, the answer can I pay what I owe in instalments explains the common procedure. And if the house is the deceased's habitual home, the habitual home reduction can change the starting figure.
If you are facing an inheritance with no cash, send us the make-up of the assets, the date of death and what each heir wants to do through the inheritance form. We tell you which routes are still open given the time left; we do not guarantee that the authorities will grant the deferral, which is up to them.
The Ortegas paid the proportional share with the 12,000 € in the account, two siblings sold their share to the third with bank financing, and she paid what she was short in instalments.
When any heir lives outside Spain, the deferral is handled before the State's Agencia Tributaria (the Spanish tax agency); we coordinate it within Salama Tax for inheritance and gifts.