Siblings must be over 65 and have cohabited with the deceased to reduce the tax

Access to tax reductions in Inheritance and Gift Tax (ISD) is subject to strict compliance with the requirements established in current regulations. A recent binding ruling from the Dirección General de Tributos (DGT) has specified the conditions that collateral relatives, such as siblings, must meet to benefit from the habitual residence reduction.

What the DGT has ruled

The DGT has clarified that, for a collateral relative to apply the reduction provided for in article 20.2 c) of Law 29/1987, they must simultaneously meet two fundamental conditions:

• Age: The beneficiary must be over sixty-five years old.
• Cohabitation: They must have cohabited with the deceased during the two years immediately preceding the death.

Furthermore, the tax authority emphasizes that the existence of such cohabitation and the classification of the property as a habitual residence are matters of fact. This implies that the taxpayer bears the burden of proving that these circumstances were effectively met in the time and manner required by law.

What this means for you

If you are a sibling or collateral relative who is going to receive a home through inheritance, you cannot automatically apply the habitual residence reduction based solely on your relationship. The regulations are restrictive and require that cohabitation was real and continuous during the two-year period prior to death, in addition to reaching the minimum age of sixty-five years.

The relevance of this criterion lies in the need to have solid means of proof. Since these are matters of fact, the administration may require documentation that accredits the tax domicile, census registration (empadronamiento), or any other element that certifies effective cohabitation with the deceased person.

What you should do

In a succession situation involving collateral relatives, it is necessary to verify whether the age requirements and the required cohabitation period are met. Since the burden of proof lies with the heir, it is fundamental to gather the necessary documentation that supports the cohabitation prior to death to avoid possible actions by the Tax Administration. Each case presents particularities that must be carefully analyzed to determine the viability of the reduction.