Main residence and second residence in inheritance

The main residence and the second residence in the inheritance may have different treatment as far as taxes are concerned.

To understand the treatment regarding Inheritance Tax and Capital Gains Tax, it is necessary to know when a property is considered a main residence and the differences between a main residence and a second residence in the inheritance.

When is a property considered a main residence?

The concept of main residence is closely related to the time spent living in it. Therefore, for a property to be considered your main residence, you must have lived in it for at least three years.

In the case of a newly built home, the residency period to be considered a main residence is 12 months after the acquisition.

Even if the established deadlines are not met, it may be considered a main residence if the taxpayer:

Passes away.
Gets married or divorced.
Relocates for work reasons.
Changes residence due to circumstances that force them to do so. For example, due to their own incapacity or that of a family member.
In the case of owning multiple properties, it is also considered a main residence if they have resided there for more than 183 days per year.

It is possible to include attached properties, such as storage rooms and parking spaces. The only condition is that they must be in the same building and at the time of acquisition they were inseparable from the home.

How to prove the main residence

To prove that a home is a main residence, it is important to obtain the municipal registration. Despite this, the registration itself proves nothing. That is, registration is not sufficient evidence to prove residence and main residence in a specific place.

There are other pieces of evidence that can prove the residence of a person who is registered in a home:

Bank correspondence of the taxpayer.
Address that appears on their ID.
Income tax return showing the address.
Notarial deeds.
Certificate from the president of the community of residents confirming that the residence of the person corresponds to their main residence.

If all, or at least several of these documents are presented, the taxpayer will obtain proof of main residence in that home. This will be recorded for the purposes of the Tax Agency.

In the case of residing in a place where one is not registered, it is also possible to demonstrate to the Tax Authority that this is the main residence. Some of the documentary evidence includes:

Receipts from the community of property owners.
Work center certificate.
Family book proving that the children of the owner were born at the place of residence.
Electricity, gas or Internet bills.

Differences between main residence and second residence in inheritance

When you inherit a home, it is necessary to pay the Inheritance Tax. This tax is assigned to the Autonomous Communities, so it will be necessary to apply both state and regional regulations, depending on where the property is located.

In addition, when real estate is inherited, the Tax on the Increase in Value of Urban Land, known as Capital Gains Tax, will also have to be submitted and paid.

Inheritance tax

In the Inheritance Tax, there are differences depending on whether what is inherited is a main residence or a second residence.

The Inheritance Tax Law allows heirs with a certain degree of kinship to apply a reduction in the tax of up to 95%, with a maximum deduction amount. To do so, the heir must be the spouse, ascendants or descendants of the deceased, or a collateral relative over 65 years old who lived with the deceased during the two years prior to their death. And, in addition, the acquisition must be maintained for 10 years following the death of the deceased, unless the acquirer dies within that period.

The Autonomous Communities may subjectively expand the beneficiaries, increase the reduction percentage or the maximum reduction limit, or reduce the requirements for its application, but not the other way around. In other words, they can improve the existing deductions at the national level but not worsen what is established by state regulations.

Therefore, to know the conditions that apply to the Inheritance Tax, it is necessary to take into account whether the inherited home is considered the main residence and the place where it is located.

Capital Gains Tax

The Tax on the Increase in Value of Urban Land, known as Capital Gains Tax, is a local tax, so each Municipality establishes the amount to pay for the land and properties located in its territory.

There may be reductions in some locations if the home is considered the main residence. As we have seen, the main residence and the second residence in the inheritance can have different treatment as far as taxes are concerned. The treatment as the main residence is closely related to the time spent residing, and significant reductions may be applied to the Inheritance Tax if it is considered the main residence.

Further information

This article is part of our service Inheritance in Spain. Visit this section where you will find all the useful information on this topic, including a complete guide on Inheritance in Spain with a non-resident, expat or foreigner.

Solve your doubts

✅ Our staff speaks perfectly Spanish, Valencian, English and German with what will be able to communicate with us in your own language and thus clearly resolve your queries.

📍 Denia – Plaza del Convento, 6 – Mezzanine floor door B
📍 Valencia – Calle Creu Roja, 1 – Block 6, Floor 1, door 10 (* only by appointment)

✉📞 Contact: info@firmalex.com – Tel. +34 966 421 416 – Whatsapp +34 622 497 615