How to File Modelo 210 if You Inherit Property in Spain

Inheriting property in Spain can bring exciting opportunities, but it also comes with specific tax obligations. First and foremost, before you can legally receive the property, Inheritance Tax (Impuesto sobre Sucesiones y Donaciones) must be paid. This tax is due within six months from the date of death, and the rate varies depending on the region where the property is located. The amount owed also depends on the value of the property and your relationship to the deceased. Once this tax is paid and the property is registered in your name, you will then be responsible for ongoing tax obligations, such as Modelo 210.

Modelo 210 is required for declaring Non-Resident Income Tax (Impuesto sobre la Renta de No Residentes, IRNR) in Spain. As a non-resident who inherits property, you must file this form to declare any income derived from the property, even if it is not rented out. Additionally, if the property has multiple owners — for example, if three or four siblings inherit the property — each co-owner must submit a separate Modelo 210 tax return for their share of the property.

For the year in which the deceased passed away, the heirs must submit a Modelo 210 tax return covering the period from 1st January until the date of death. Additionally, heirs must report imputed income from the date of death until the end of the year, reflecting their period of ownership.

In this article, we’ll break down the key aspects of filing Modelo 210 after inheriting property in Spain, including an example of how to calculate the tax due.

What Is Modelo 210?

Modelo 210 is the form non-residents must use to declare and pay taxes on income generated from property in Spain. For non-residents inheriting real estate, this typically involves reporting either rental income or, if the property is not rented, deemed or imputed income. Spanish tax authorities assume that property ownership, even without rental income, generates a theoretical rental income that is subject to taxation.

If you rent out the inherited property, you must declare the actual rental income received. If the property is not rented out, you will need to declare imputed income, which is based on a percentage of the cadastral value (the official property value set by the local municipality). The deemed rental income is usually calculated at 1.1% or 2% of the cadastral value, depending on the location of the property.

When Must You File Modelo 210?

There are three primary scenarios in which non-resident property owners must file Modelo 210:

1. If You Rent Out the Property:

If the inherited property is rented, you are required to declare the rental income. This income is taxed at a flat rate for non-residents.

• Filing period: Starting in 2024, you should file Modelo 210 annually, within the first 20 days of January for the previous year’s income.

2. If You Do Not Rent the Property:

Even if the property is not rented, Spanish tax authorities expect non-resident property owners to declare a deemed or imputed income. This fictional income is usually 1.1% or 2% of the cadastral value of the property, depending on the municipality in which it is located.

• Filing period: The form must be filed annually, covering the period from 1st January to 31st December of the preceding year

3. If You Sell the Property:

If you sell the inherited property, you are required to declare capital gains tax on the sale. If no profit is made, you may be able to claim a refund of the withholding tax using Modelo 211. It’s important to note that the acquisition value and date recorded in the deed of inheritance will be used to calculate the capital gains tax.

• Filing period: You must file the Modelo 210 within four months of the sale.

Special Considerations for Inherited Property in the Year of Death

When inheriting property in Spain, heirs have specific filing responsibilities for the year in which the deceased passed away:

• Reporting Income Until the Date of Death:

The heirs must file a Modelo 210 for the period from 1st January to the date of death for the deceased's share of the property. This ensures that the income attributable to the deceased is properly declared.

• Reporting Imputed Income After the Date of Death:

From the date of death until the end of the calendar year, the heirs must report the imputed income for their share of the inherited property. The imputed income is based on the cadastral value and is divided proportionately among the heirs.

Example of Imputed Income Calculation for 2023

Let’s say a property with a cadastral value of €60,000 is inherited by two heirs from the UK (non-residents). The imputed income percentage for the property is 2%, and the tax rate for non-residents from the UK is 24%. The deceased passed away on 24th May 2023. Here’s how the tax is calculated for each heir in 2023:

Imputed Income Calculation:

• Cadastral Value: 60,000€
• Imputed Income Rate: 2%
• Annual Imputed Income: 60,000€ × 2% = 1,200€
  Since there are two heirs, each will declare half of this income:
  1,200€ ÷ 2 = 600€ per heir (for the full year).

Deceased’s Tax Liability (January 1st to May 24th):
The deceased owned the property from January 1st to May 24th, which is 143 days of the year.

• Portion of the year the deceased owned the property: 143 ÷ 365 = 0.392 (39.2% of the year).
• Imputed income for the deceased’s ownership period:
  1,200€ × 0.392 = 470.40€
• Tax due for the deceased:
  470.40€ × 24% = 112.90€

Imputed Income for the Period After Death (May 24th – December 31st):
From the date of death (May 24th) to the end of 2023, there are 222 days of ownership. We calculate the proportion of the year they owned the property:
222 ÷ 365 ≈ 0.608 of the year.

• Each heir’s share of the imputed income for the rest of the year:
  600€ × 0.608 = 364.80€.
• Tax due for each heir:
  364.80€ × 24% = 87.55€.

Conclusion

Filing Modelo 210 after inheriting property in Spain may seem complex, but it is an essential part of managing your tax obligations as a non-resident property owner. By understanding when and how to file, and ensuring you have all the necessary documentation, you can avoid penalties and manage your new responsibilities effectively. If in doubt, it’s always advisable to seek guidance from a tax professional familiar with Spanish non-resident taxation. At IberianTax, we are here to help guide you through the process and ensure compliance with your tax obligations.