Selling after an inheritance: procedures, taxes, and tips to avoid losing money

Documentation and first steps after inheriting a property

The first step to selling an inherited property is to formally accept the inheritance and legally record ownership. This requires gathering a series of essential documents:

Basic documentation

• Death certificate: proves the property owner’s death and is requested at the Civil Registry.

• Certificate of last wills: confirms whether a registered will exists and who the legal heirs are. Obtained from the Ministry of Justice.

• Will or declaration of heirs: defines the distribution of assets. If no will exists, the notarial declaration of heirs will be the key document.

• Deed of acceptance of inheritance: signed before a notary, formalizes the allocation of assets to the heirs.

• ID card or passport of the heirs: identification documents of those accepting the inheritance.

Registration in the Land Registry

Once the inheritance has been accepted, it is essential to register the allocation in the Land Registry. This step provides full legal certainty to the transaction and allows the heirs to be officially recognized as property owners. Without this registration, the property cannot be sold later on.

Taxes on inheriting and selling a property

Accepting an inheritance is not free: it involves paying several taxes that vary depending on the autonomous community and the property’s situation. Being well informed is essential to avoid surprises and to manage the finances.

Inheritance and Gift Tax 

This tax applies to the transfer of assets by inheritance. Each autonomous community sets its own rates and deductions.

• In regions such as Madrid, direct descendants benefit from very high reductions, which can leave the tax practically at zero.

• In others, such as Asturias or the Valencian Community, the tax burden can be significant.

It is important to pay this tax within the established deadlines (generally six months from the death, extendable by another six) to avoid penalties or surcharges.

Municipal capital gains tax

Also called the Tax on the Increase in the Value of Urban Land , it taxes the increase in land value from when the deceased acquired the property until their death. It is paid to the local town hall and depends on the cadastral value and years of ownership.

Capital gains tax in Personal Income Tax 

If, after accepting the inheritance, you decide to sell the property, you must declare the capital gain obtained in your Capital gains tax in Personal Income Tax. This is calculated by subtracting the value declared in the inheritance (tax base) from the sale price.

For example: if you inherit a house valued at €200,000 and sell it for €250,000, you will be taxed on €50,000.

Here it is advisable to consult a tax advisor: poor planning can result in a much higher tax bill than expected.

Debts and encumbrances associated with the property

Before selling, it is advisable to check whether the inherited property has encumbrances or outstanding debts, as these must be settled before selling (as in any other sales process):

• Mortgages: if the property is mortgaged, the debt passes to the heirs. It can be canceled upon sale or negotiated with the bank.

• Community fees: debts owed to the community of owners must be settled before the sale.

• Municipal taxes: property tax and other levies must be up to date.

• Utilities: water, electricity, and gas must also be regularized.

A debt-free property inspires confidence in buyers and greatly facilitates the sale, as well as achieving better market prices.

Preparing the inherited property for sale

Once the legal and tax matters are resolved, it’s time to focus on presenting the property. First impressions count, as they can influence buyers’ decisions –and the price they are willing to pay–:

• Cleaning and tidying: a clean, depersonalized property is more attractive.

• Minor repairs: faucets, outlets, or blinds working correctly show care.

• Neutral paint: light, bright colors help spaces feel larger.

• Home staging: increasingly common, this professional service highlights the property’s strengths and can significantly raise the selling price.

Additionally, it’s essential to obtain a professional appraisal or at least a market analysis to set a realistic price. Overvaluing the property can unnecessarily prolong the process and cause missed opportunities.

Selling with multiple heirs: how to manage it

When there are multiple heirs, selling can be more complicated. It is crucial that all heirs agree to sell. A dissenting heir could block the sale process. There are different options:

• If all agree: the transaction proceeds normally, and the sale proceeds are then divided according to inheritance shares.

• If one does not want to sell: there are legal alternatives:

  • Termination of co-ownership: one heir buys out the others.

  • Sale of the undivided share: it is possible to sell only the inherited share, although this is less common.

  • Judicial division: as a last resort, a judge can order the sale and distribution.

In any case, it is most advisable to seek mutual understanding. Early mediation can prevent lengthy and costly legal proceedings.

Legal procedures to formalize the sale

Once the inheritance is settled and taxes are paid, it is time to sell. To do this, a series of legal and administrative procedures must be followed:

• Deed of sale before a notary: the contract is signed between the selling heirs and the buyer.

• Registration in the Land Registry: guarantees the legal transfer to the new owner.

• Certificates of being up to date with payments: both property tax and community fees.

These documents are not only mandatory but also provide confidence and security for all parties.

Practical tips to avoid losing money

Selling an inherited property is a process involving considerable economic value. Lack of information or rushed management can reduce the profit from the sale. Some key tips:

Seek legal and tax advice

A lawyer or tax advisor can help you reduce the tax burden and avoid costly mistakes. Additionally, having this professional support provides more security to potential buyers and speeds up the transaction.

Value the property with real data

Using professional reports or market comparisons will prevent you from setting an unrealistic price. An accurate valuation also gives you more room for negotiation and avoids the property staying on the market too long.

Keep documentation up to date

Having all certificates ready speeds up the transaction and avoids delays. This demonstrates seriousness to the buyer and increases trust during the sales process.

Prepare the property for sale

Investing in small improvements can bring immediate revaluation. A well-maintained property makes a better impression during viewings and can make the difference compared to similar properties.

Negotiate calmly

It’s not just about the price: the buyer’s conditions and solvency also matter. Taking the time to assess each offer will help you close a more beneficial and stable sale.

Consider alternatives

If the market is unfavorable, you can always rent out the property for a while and earn income while you decide. This way, the property does not remain unproductive and continues to be a profitable asset.

Selling an inherited property in Spain involves a combination of legal procedures, tax obligations, and practical management. With good planning, it is possible to maximize the value of the transaction and avoid mistakes that could lead to losses.

At Engel & Völkers, we have the experience and resources to support you at every step: from the initial valuation to the notary signing. If you have inherited a property and are considering selling, trust a team that understands both the market and the sensitivity of these operations.

Frequently asked questions about selling an inherited house

How long do I have to sell an inherited property?There is no legal deadline to sell it, but there is to pay taxes (6 months, extendable).

What happens if one of the heirs does not want to sell?An agreement must be reached, a termination of co-ownership arranged, or, as a last resort, a judicial division pursued.

Can I rent out an inherited property before selling it?Yes, as long as all heirs agree. The income must be declared in the IRPF.

Which taxes must be paid when selling an inherited house?Inheritance Tax (when accepting the inheritance), municipal capital gains tax, and, if there is a profit, capital gains tax in the IRPF.

Can an inherited property with an outstanding mortgage be sold?Yes, but the buyer must agree to assume the debt, or it must be canceled before signing.

Is it better to sell quickly or wait for the market to rise?It depends on the economic situation and the heirs’ liquidity needs. In general, a price adjusted to the market allows for a faster sale without losses.