Buying property and/or boat in France or Spain

[Hurricane]

Does this all happen if a UK husband and UK wife own a boat in (say) Spain and one spouse dies?
I assume in this case that the boat is a UK asset and the share of the boat located in (say) Spain is subject to UK IHT but can be passed to the surviving spouse free from IHT like any other UK asset.
Obviously fully taxed after the death of the second spouse - subject to the usual allowances (nil rates etc).

 

[Sticky Fingers]

IIRC a distinction applies, ie joint owners of all the shares whereby ownership passes to surviving owner with no intervention, vs owing 50% of the shares each where probate would apply and any IHT applicable.

 

[jfm]

Does this all happen if a UK husband and UK wife own a boat in (say) Spain and one spouse dies?
I assume in this case that the boat is a UK asset and the share of the boat located in (say) Spain is subject to UK IHT but can be passed to the surviving spouse free from IHT like any other UK asset.
Obviously fully taxed after the death of the second spouse - subject to the usual allowances (nil rates etc).

This must be considered separately under UK and Spanish law.

For Spanish law/tax, the answer depends on whether the boat is a Spanish situs asset at the time of the 1st death, applying Spanish law. It's located in Spain but registered in (I think) UK. I'd be 75% confident that Spain would see the boat's situs as where registered not where located, but that might be unclear/debatable in Spanish law or in the eyes of Spanish officials and you'd need a Spanish expert to tell you.

So far as UK IHT is concerned, you are correct, except that your multiple references to "UK asset" are out of place because IHT applies to your worldwide assets and its therefore irrelevant whether any asset of yours is UK or not.

 

[jfm]

IIRC a distinction applies, ie joint owners of all the shares whereby ownership passes to surviving owner with no intervention, vs owing 50% of the shares each where probate would apply and any IHT applicable.

You're only considering UK law there SF. What's relevant is Spanish law.

 

[DAW]

Does this all happen if a UK husband and UK wife own a boat in (say) Spain and one spouse dies?
I assume in this case that the boat is a UK asset and the share of the boat located in (say) Spain is subject to UK IHT but can be passed to the surviving spouse free from IHT like any other UK asset.
Obviously fully taxed after the death of the second spouse - subject to the usual allowances (nil rates etc).

I think you need to check both Spanish inheritance rules and tax law, and also the relevant tax treaties with the UK. Usually assets (including moveable assets like boats) are subject to inheritance tax in the country where they are located at the time of death, but the tax treaties operate to avoid double taxation for citizens/residents of countries who are subject to taxation by their home country on worldwide assets,

For example, when I first decided to keep a boat in France I was advised that a UK-France treaty on inheritance tax from 1963 contained a specific provision to the effect that boats owned by UK citizens and kept in French waters were subject to inheritance tax in the country of registration … so only subject to tax in France if registered in France. Not sure yet how this will be affected (if at all) by the changes to the UK inheritance tax rules for non-residents which take effect in April.

 

[jfm]

Not sure yet how this will be affected (if at all) by the changes to the UK inheritance tax rules for non-residents which take effect in April.

It will be affected. If you've been out of UK 11 years you escape UK IHT on non UK-situs assets despite being UK domiciled, now that domicile is being wiped from UK tax law. Therefore for folks like you and me (living MC, boat in France) the UK/Fr treaty you mention doesn't give relief from Fr IHT because there is no double tax (and see especially Art III 2a of the treaty ).
Thus a boat in France is potentially in scope of French IHT, unless France regards non French registration as determinative of non French location of the asset under Fr domestic law without regard to tax treaties (on which point I don't know the answer). The MC/France inheritance tax treaty doesn't relieve you from Fr IHT, even though the UK/Fr treaty has the magical clause 25(1) that allows the Fr/MC treaty potentially to apply to UK nationals living in MC, because the MC/France inheritance tax treaty gives taxing rights to Fr not MC.
The only saving grace is that Fr IHT doesn't apply inter spouse, so best for you to own boat, die first (!), leave boat to spouse in will, and get spouse to sell it asap and not bank the money in France (or MC for that matter; Jersey is better).

 

[Hurricane]

So far as UK IHT is concerned, you are correct, except that your multiple references to "UK asset" are out of place because IHT applies to your worldwide assets and its therefore irrelevant whether any asset of yours is UK or not.

Understood.
Having just spent a lot of my own time researching and completing the IHT400 and all the associated forms, I think I have a good understanding of IHT from the UK end.
And I do remember declaring worldwide assets sections even though some of my declarations were quite minimal.

 

[ashtead]

Ideally of course the surviving spouse would give up a share of the vessel being uk registered so other beneficarifies can take advantage of the IHT allowance if the surviving spouse was inheriting all other assets. Turning to Spain as far as I could work out on a sale of real property on death of one owner ie the husband dies and the surviving spouse who inherits decides to sell the actual taxes on the gain (let’s say property acquired in 1980s) is quite low compared to similar scenario in UK where the CGT on selling spouse share is fairly high in comparison even with extinguishment of the deceased spouse CGT on death.

 

[DAW]

It will be affected. If you've been out of UK 11 years you escape UK IHT on non UK-situs assets despite being UK domiciled, now that domicile is being wiped from UK tax law. Therefore for folks like you and me (living MC, boat in France) the UK/Fr treaty you mention doesn't give relief from Fr IHT because there is no double tax (and see especially Art III 2a of the treaty ).
Thus a boat in France is potentially in scope of French IHT, unless France regards non French registration as determinative of non French location of the asset under Fr domestic law without regard to tax treaties (on which point I don't know the answer). The MC/France inheritance tax treaty doesn't relieve you from Fr IHT, even though the UK/Fr treaty has the magical clause 25(1) that allows the Fr/MC treaty potentially to apply to UK nationals living in MC, because the MC/France inheritance tax treaty gives taxing rights to Fr not MC.
The only saving grace is that Fr IHT doesn't apply inter spouse, so best for you to own boat, die first (!), leave boat to spouse in will, and get spouse to sell it asap and not bank the money in France (or MC for that matter; Jersey is better).

My comment about not being sure was because I've received conflicting advice on the implications of the UK IHT changes on boats. Some argue that the approach could be similar to that for liability to registration tax and result in exemption, while others argue that there is no specific exemption under the French IHT regime and so the position will be similar to that for vacation homes, which is as you describe above. Given the scale of the upside from the IHT changes, it's a nice problem to have

 

[Grubble]

I understand that in Spain, there is no Inheritance Tax Relief between husband and wife so if you are married and one of you dies, the other can end up with a tax bill.
I may be wrong though.

It depends on which Autonomous Community you live in - Andalucia for example exempts the first million euros, Madrid has a 1% rate etc.

 

[jfm]

My comment about not being sure was because I've received conflicting advice on the implications of the UK IHT changes on boats. Some argue that the approach could be similar to that for liability to registration tax and result in exemption, while others argue that there is no specific exemption under the French IHT regime and so the position will be similar to that for vacation homes, which is as you describe above. Given the scale of the upside from the IHT changes, it's a nice problem to have

Yup, 100% agree your last sentence. Rachel From Accounts pandered to the whim of the Daily Mail readers who thought non dom tax breaks were a bad thing, so she abolished domicile as a tax concept, and inevitably gave a huge tax break to a bunch of UK domiciled expats. But the public got what they wanted.

I have never done one single item of IHT planning in my whole life, and now Rachel has given me total exemption! As you say, a bit of Fr or MC IHT on the odd asset sited in those countries just isn't worth worrying about I did think of creating a mortgage on my boat in favour of my own Jersey company to solve the tax, but I'm not sure I can be bothered!

By the way, I've only done 7 of the required 11 years so I have a way to go before my kids get the Rachel Bonus. Hope you're similarly close or even there already .

 

[benjenbav]

Rachel From Accounts …abolished domicile as a tax concept, and inevitably gave a huge tax break to a bunch of UK domiciled expats. But the public got what they wanted.

“The public gets what the public wants/the public wants what the public gets” - P Weller

 

[DAW]

Yup, 100% agree your last sentence. Rachel From Accounts pandered to the whim of the Daily Mail readers who thought non dom tax breaks were a bad thing, so she abolished domicile as a tax concept, and inevitably gave a huge tax break to a bunch of UK domiciled expats. But the public got what they wanted.

I have never done one single item of IHT planning in my whole life, and now Rachel has given me total exemption! As you say, a bit of Fr or MC IHT on the odd asset sited in those countries just isn't worth worrying about I did think of creating a mortgage on my boat in favour of my own Jersey company to solve the tax, but I'm not sure I can be bothered!

By the way, I've only done 7 of the required 11 years so I have a way to go before my kids get the Rachel Bonus. Hope you're similarly close or even there already .

I’m at 13 years … so already over the line Like you, I’ve never done any significant IHT planning just assuming that I would start to gift assets at some point, hopefully survive seven years, and that anything left would then be subject to UK IHT. The change to a residence based regime was a very welcome but totally unexpected development.

 

[Ray Purchase]

“The public gets what the public wants/the public wants what the public gets” - P Weller

Slight correction:

'The public gets what the public wants, But I want nothing this society's got'

 

[ingenious]

The rig is still out there of course but I believe they haven't pumped ashore for a long time.
That fire you mention was a very long time ago - on the western side of the town - all newly renovated now.

It is still quite a small town - the AP7 runs the other side of the Montsia mountain so the town remains a little cut off.
Within the last couple of years, the locals had an election and decided to rename it to "La Rapita" and drop the Sant Carles bit.
Our marina (the one that you are probably referring to) isn't that big - see this link to a drone virtual tour that I put together.
SCMCHAT 3D Virtual Tour
Google Maps still calls the marina "Sant Carles Marina" but calls the town "La Rapita"
Most of the local signs are now "La Rapita" but we still all refer to it as Sant Carles.

We like it for the reasons that you say above.
Lots of local Spanish events during the year - mostly for the locals.
In the winter months it is a nice quiet place but you have to avoid July and August because it has become a bit of a Spanish holiday destination.
July and August is a bit hot anyway.

I've been to La Rapita today and it has fairly grown in the past 40 years! I didn't get the best first impression as my sat nav took me to the back end of the marina where the hard storage is and I had a bit of a misunderstanding with a security guard but once I found the right place it was fine. The new marina is huge and still quite full at this time of year. Got some info on tariffs for floating pontoon and stern to moorings and shown the rest of the facilities.
Had a wander up to the beach past what used to be a fairly small hotel called Miami Parc and is now a massive one called Miami Mar.
Had lunch in a bar which I think was the one I first had squid in all those years ago - ate them thinking that the onion rings were rather chewy!
All in all, not a bad place, I'm going to come back and have a look at a few houses/apartments

 

[Hurricane]

I've been to La Rapita today and it has fairly grown in the past 40 years! I didn't get the best first impression as my sat nav took me to the back end of the marina where the hard storage is and I had a bit of a misunderstanding with a security guard but once I found the right place it was fine. The new marina is huge and still quite full at this time of year. Got some info on tariffs for floating pontoon and stern to moorings and shown the rest of the facilities.
Had a wander up to the beach past what used to be a fairly small hotel called Miami Parc and is now a massive one called Miami Mar.
Had lunch in a bar which I think was the one I first had squid in all those years ago - ate them thinking that the onion rings were rather chewy!
All in all, not a bad place, I'm going to come back and have a look at a few houses/apartments

Sorry to have just missed you.
I was out there last week lifting the boat into the boatyard.
Weather in Sant Carles at the moment isn't great - better this week but lots of rain last week.
The weather did perk up a little today.
I'm not in Spain at the moment but her security cameras are working - this photo taken at 14:24.
Not the best view either - the old visitor ferries after they closed the restaurants in the lagoon.



The old girl is ashore for a couple of weeks to "top up" the Coppercoat but we need some dry weather.


Yep we like the Miami Mar's restaurant and the hotel is one of the best in town.
Another good restaurant is the Varadero - on the front - opposite the entrance to the main port.

 

[ingenious]

Another good restaurant is the Varadero - on the front - opposite the entrance to the main port.

Thanks for the recommendation, menu looks interesting.
I'm going to get in touch with a couple of estate agents to arrange to view some properties
https://www.idealista.com/inmueble/105834185/
https://www.idealista.com/inmueble/91480802/
Probably Thursday or Friday
At the moment just to see what you get for your money but you never know...
Certainly the marina prices are better than others I've found online elsewhere

 

[Ray Purchase]

Thanks for the recommendation, menu looks interesting.
I'm going to get in touch with a couple of estate agents to arrange to view some properties
https://www.idealista.com/inmueble/105834185/
https://www.idealista.com/inmueble/91480802/
Probably Thursday or Friday
At the moment just to see what you get for your money but you never know...
Certainly the marina prices are better than others I've found online elsewhere

You could also check

Properties for sale in Spain

Fotocasa.es: Flats for sale and to let