Inheritance tax on a Balearic home when heirs live abroad
Children, spouses and parents who inherit a home in the Balearic Islands can claim a 100% relief on Balearic inheritance tax, and since 2025 the law states plainly that this also applies to heirs who live abroad. Siblings and more distant heirs get smaller reliefs or none. Your home country may also tax the same home.
Which rules apply when the heir lives abroad
Each Spanish region sets its own inheritance tax rates and reliefs, and since July 2021 every non-resident, in or out of the EU, can use the regional rules. If the person who died lived in the Balearics, Balearic rules apply. If they lived abroad, the rules of the region holding most of the value of their Spanish assets apply, so the Balearics where the island home is the main asset.
When the heir lives outside Spain, the return goes to the Spanish tax agency's national office in Madrid, not the Balearic office, but the Balearic reliefs still apply. It is due within six months of the death, on forms 650 and 660, even when no tax is payable.
What each group of heirs pays
What matters most is how closely the heir was related to the person who died.
| Group | Who | Relief on the tax |
|---|---|---|
| I | Children and grandchildren under 21 | 100% |
| II | Children and grandchildren aged 21 or over, spouses, parents | 100% |
| III | Brothers, sisters, nephews, nieces, uncles, aunts, in-laws | 60% for siblings, nephews, nieces, uncles and aunts not inheriting alongside the deceased's children; 35% otherwise |
| IV | Cousins, more distant relatives and unrelated people | None |
The book's example is a €750,000 holiday home. A son or daughter pays nothing. A brother who is not inheriting alongside children, and whose own wealth is under €400,000, would pay about €92,800, roughly 12% of the value. An unrelated friend would pay a good deal more. The reduction of up to €270,151 per heir for the deceased's main home does not cover a holiday home.
The 2025 change for heirs abroad
The 100% relief arrived with a Balearic decree-law in July 2023. As first written, it covered only heirs who were Spanish tax residents, so for two years heirs abroad relied on specialists' view that it reached them too.
The Balearic budget law for 2025 (Law 6/2025) removed the residence condition. For deaths on or after 25 July 2025, the 100% relief and the 60% and 35% reliefs apply to heirs abroad by the letter of the law. Where the death was before that date, the earlier wording applies, and a non-resident heir should get written advice from a Spanish tax adviser before claiming.
The conditions to watch
To keep the relief, the value you declare for the home must not be more than 20% above its Catastro reference value. A higher figure lowers capital gains tax on a later sale, but exceeding that margin can cost you the relief.
Even when nothing is owed, each heir needs an NIE, and the inheritance is accepted before a Spanish notary. The municipal plusvalía is due on inheritance within six months, extendable to a year on request. If the heirs later sell, the buyer will withhold 3% of the price because they are non-resident sellers.
Wills and the EU Succession Regulation
Who inherits is a civil law question. Since August 2015, the EU Succession Regulation (650/2012) has meant that the whole estate, Balearic home included, follows the law of the country where the person habitually lived at death, unless their will chooses the law of their nationality. The UK and Ireland are outside the Regulation, but Spanish courts and notaries still apply it to British owners, who can choose English law.
A Spanish will is optional but usually makes things simpler for heirs, as long as it is drafted so that it does not revoke your will at home.
Gift now or inherit later
Since July 2025, gifts between parents and children, or between spouses, carry a 100% deduction from Balearic gift tax, including a gift to a child who lives abroad. But Spain treats a gift of property as a sale at current value, so a non-resident giver pays 19% on the gain, whereas the deceased's gain is not taxed on inheritance. The plusvalía municipal is due on a gift too. The gift needs a Spanish public deed, a value no higher than the reference value plus 20%, and form 651 within 30 working days. For a home bought decades ago, inheriting is usually cheaper overall; for a recent purchase with little gain, a gift can make sense.
Your home country may tax it too
The Balearic relief removes Spanish tax only. Germany, Italy, the Netherlands and the United Kingdom (for long-term residents) tax their residents' worldwide estate and give credit only for tax actually paid in Spain. A zero Spanish bill leaves nothing to credit. France, under its 1963 treaty with Spain, and Sweden, which has no inheritance tax, are the exceptions. The book's country annex (Chapter 13) sets out each country's position. These are the rules at the time of writing (September 2026).
More detail in the book. Chapters 11 and 13 of Buying a Home in the Balearic Islands as a Non-Resident cover this with worked examples, deadlines and the risks behind the figures.
General information based on the rules in force in September 2026, not legal or tax advice. Rules change often: check your own case with an independent Spanish lawyer or tax adviser before you act.
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