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V2550-14 20 September 2014 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · base imponible

Loans from a deceased person cannot be deducted if the creditor is an heir

A taxpayer inquired whether a personal loan made by children to their father is deductible for Inheritance Tax purposes if the father passes away before repayment. The Directorate General for Tax Affairs (DGT) ruled that such debts are not deductible if the creditor is an heir.

The question raised

Whether the debt incurred by the personal loan with their heirs would be deductible for the purposes of the tax base of the Inheritance and Gift Tax in the event that the father's death occurred prior to the full repayment of the personal loan.

The DGT's ruling

According to Law 29/1987, the debts of the deceased are deductible provided they are substantiated, except for those in favor of heirs, legatees, or direct family members such as siblings. Since the children are the creditors of the loan, the debt is not deductible from the tax base of the tax.

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