A few days ago I wrote a post in connection to the property market in Barcelona and the increase of holiday apartments in the city. The Catalan Government has recently regulated the holiday rentals market and now allows holiday rentals as long as the owners comply with certain obligations. Unfortunately, the situation is different in other touristic places such as the Balearic Islands or the Canary Islands where there are several restrictions to holiday rentals. Take the case of Mallorca, for example. In Mallorca it is only possible to let out for short periods of time dettach and semidettached houses. This leaves apartments and terrace houses outside of the regulation and therefore unable to be let out on a short term basis. There are some exceptions with some apartments but these usually involve the whole building counting with a touristic licence.
When it comes to deattached and semidettached houses in Mallorca, these can be let out for holidays as long as a touristic licence has been obtained and the owner has complied with the following requirements:
– File the necessary declaration of commencement of activity (DRIAT)
– The property is let out for short periods of time that can never exceed the period of 2 months
– The property is let out in its entirety and not on a “per room” basis
– Cleaning and maintenance services are provided
Having said that, what happens if the owner of an apartment in Mallorca or Menorca wants to let it out for short periods of time to different occupiers and he does not have a licence? Well, in that case it would be better to let it on a long term basis. The income might be lower but at least there will be no fines or penalties for breaching the law.
The above applies to the Balearic Islands but each region in Spain has different rules and therefore not all regions face the same restrictions. As always, it is advisable to do some research before embarking on buying a holiday apartment, specially if the ulitmate intention is to let it for holidays.
In most occassions, inheriting from a dead relative or friend comes associated with an increase in wealth. The heir or beneficiary inherits the assets or money that the deceased had and once the inheritance tax is paid, which sometimes can prove very expensive, the heir is left with a property in Spain and hopefully some money in the bank. This, once we dettach it from the pain and grievance caused by the death of the loved one, usually has a positive side. There will be a property in Spain that can be sold, let or used during holidays. If the property is sold, the heir will be able to get some money after the sale and hopefully spend it or save it as he wishes.
However, this is not always the case. In some cases the property might be charged with a Spanish mortgage leaving no equity for the heir. In other occassions the property could be subject to very high maintenance expenses such as community fees, golf course fees, etc that make the whole thing of owning the property more burdening than having no asset at all. Finally, it may be the case that the inheritance tax due on the Spanish assets is extremely high and the heir is unable to pay it without selling the property. In those circumstances it is normal for the heir to question his intentions and weigh the possibility of renouncing to the Spanish estate.
In general terms, renouncing to the Spanish estate is not a good idea because in most of the cases there will be a property that can be let out or sold. Sometimes it will be a matter of waiting a few years until the market picks up or the mortgage is paid off, but most people do not renounce to what they inherit in Spain. Notwithstanding this, it is true that there is a small percentage of heirs that are not interested in inheriting the assets in Spain and who see the Spanish property more as a burden than an asset. In those circumstances, the heirs can renounce to the Spanish estate and their rights will pass to either the substitutes under the will or to their own beneficiaries, which usually means their children. This is something that needs to be considered before making any renounciation because the renounciation can trigger further consequences that may prove even more detrimental. For instance, imagine that Joe Bloggs dies with assets in Spain. His Spanish will states that everything will go to his daughter Isabelle. She is not interested in the Spanish property and therefore decides to renounce. However, the will states that if Isabelle renounces, everything will go to her children (the grandchildren of Joe Bloggs) and the said children are minors. Under Spanish law, minors cannot renounce to an inheritance without the consent of a Judge. This means that the inheritance will reach a dead point where the minors can accept the estate but not reject it without the consent of a Judge. As you can see this has caused an even bigger problem.
The above is one of the scenarios that can arise. The important thing is to seek legal advice before making any decision in this regard. Do not listen to those who say that you cannot renounce to a Spanish inheritance because this is not true. Anyone, who is of age, can renounce to the Spanish inheritance but before doing it they should seek legal advice to ensure that they understand the consequences of the renounciation and see the different options available. The heirs might be surprised to see that they can transfer their rights to a specific person who might be more interested in the property than them.