When inheriting property in Tenerife, you must declare a value for tax purposes. The value you choose can affect future Capital Gains Tax when selling, so it’s important to get it right. This guide explains the three main valuation methods used in Tenerife.
1. The “Tax Value” (Valor de Referencia)
This is the value calculated by the Spanish tax authorities. In many cases, this becomes the minimum allowed value for inheritance declarations. It is usually close to market value.
2. Market Valuation
Some families choose to obtain a professional valuation. This can be useful if the property is unique or if you plan to sell soon and want a realistic price estimate.
3. Comparable Sales Method
Looking at recent sales of similar properties in the same area gives a reliable estimate. Estate agents often help with this for free.
How the Value Affects Future Taxes
The inheritance value becomes the “purchase price” for future Capital Gains Tax. A higher declared value now can reduce CGT if you sell shortly after inheriting.
Common Mistake to Avoid
Declaring a very low value may save nothing in inheritance tax (since tax is almost zero anyway) but can lead to a large CGT bill later when selling. Always consider the long-term effect.
Leave a Reply