Inheritance is often relinquished when heirs fear that debts exceed the value of the assets available to be borrowed, a dynamic that has shown signs of easing in the province after years of stalled growth. Following the real estate downturn, notaries reported around a 6% drop in the first quarter of 2022, as heirs considered whether selling the property might yield a modest profit during a difficult period.
From January to March this year, 459 formal rejections were recorded in the province, compared with 488 in the same period in 2021, according to the latest data from the Valencian Notarial College. This marks a 6% decline, contrasting with the 19% rise seen between 2019 and 2021, a jump that paused in 2020 due to lockdowns and then resumed in subsequent years.
The decision to reject an inheritance was rarely taken lightly. It persisted long after the 2008 crisis, as falling prices left many homes unsold. Mortgages that exceed market value, coupled with widespread indebtedness from the boom years and the weaker years that followed, pushed more households toward notaries to renounce inheritances. Some cases were even preventative, aimed at avoiding the risk of hidden debts appearing after the inheritor has taken on the estate.
a) In 2007, 286 cases were recorded. By 2011 the number rose to 648, doubled again in 2014 to 1,358 resignations, and continued climbing to a peak in 2015 with 2,053 minutes processed.
However, in the early months of this year, the trend began to shift. While declines were not dramatic, the pace slowed. According to Jonah Martinez, vice dean of the Valencian Notaries Union in Alicante, more sales at higher prices are creating the impression that profits are easier to realize through selling the assets. He notes an option called inheritance for the benefit of inventory, which means heirs are liable for the deceased’s debts only up to the value of the inherited property, and they receive any remaining balance after debts are settled.
In the province, sales during the first four months of the year rose by 47.5%, and the average price per square meter climbed by as much as 8.7% compared with the previous year. The scarcity of new housing stock pushed demand toward the second-hand market, helping to release properties that were harder to move before.
Effects of the pandemic
While resignations have tapered, data from the National Institute of Statistics indicate a rise in inherited homes in the province as deaths increased during the pandemic. From January to April, 3,411 ownership changes occurred, about 15% more than last year.
Boom in the real estate market triggers revenue for the state’s Generalitat
When an individual dies, heirs typically have six months to settle taxes. In earlier years, some people waited to use the money, but greater information sharing between governments has made this option less viable. The surge in pandemic-related deaths immediately affected these property transfers.
The rise in inherited properties, along with changes to the Cadastre Reference Index, contributed to a 52.9% increase in Inheritance Tax collections in the first five months of the year, according to the latest data from Valencia’s Tax Office.
Writing of wills increases, donations decrease
The heightened death rates and the isolation of the pandemic period prompted more residents of Alicante to document their final wishes, making it easier for their heirs. There was a 17% year-over-year increase in the number of wills deposited with state notaries last year, rising by 8.5% in the first quarter of 2022. Notaries report that 8,695 Alicante residents completed the process, particularly between January and March.
Conversely, donations declined, rising by 36% in the year prior to the pandemic as some parents sought to pass assets directly to grandchildren. Concerns about tax increases also played a role. In the first quarter, 1,694 donations were recorded, a 2% decrease.