US Citizens Inheriting Property in Spain: Tax Treaty, IRS Form 706 & Spanish Probate (2026)
Complete 2026 guide for US citizens inheriting real estate or bank accounts in Spain: Spain–US estate tax treaty (1990), IRS Form 706, FBAR/FATCA reporting, the EU 650/2012 choice-of-law election, NIE for US heirs, Modelo 650 inheritance tax and remote signing via Power of Attorney.
Why we wrote this guide
We act for a growing number of US citizens and US-based heirs who inherit assets in Spain — a Costa Blanca villa from a retired parent, an apartment in Madrid from a Spanish-born relative, or bank accounts and shares from a deceased spouse. The cross-border picture is genuinely complex: two tax systems, two probate logics, two reporting regimes.
This pillar guide explains, in plain English, every step a US heir must follow to lawfully accept an inheritance in Spain in 2026 — and how Bufete Padilla, with offices in Torrevieja, Elche and Moraira, handles the entire file remotely so you never need to fly to Spain.
1. The legal framework: two countries, one estate
When a US citizen (or a Spanish national resident in the US) dies owning Spanish assets — or when a US-resident heir inherits from a Spanish estate — three legal instruments interact:
- Spanish Civil Code and EU Regulation 650/2012 govern *who inherits what* and which national law applies.
- The Spain–US Estate Tax Treaty of 30 November 1990 (in force since 1992) prevents double taxation on inheritances.
- US federal law — Internal Revenue Code §2001 ff., FBAR (FinCEN 114) and FATCA reporting — applies to the US heir on worldwide assets.
The key point: Spanish inheritance tax (ISD) is paid by the heir, not by the estate, while US federal estate tax is paid by the estate. The treaty allows credits in both directions so the same euro is never taxed twice.
2. EU Regulation 650/2012: the choice-of-law election
If the deceased was a non-EU national (US citizen) habitually resident in Spain at death, Spanish succession law applies by default to the entire worldwide estate — including the forced-heirship rules (*legítima*) that reserve two-thirds for descendants.
A US citizen can override this by signing a Spanish will with a choice-of-law clause electing US state law (California, Florida, Texas, New York, etc.). This is often the single most important estate-planning step we recommend to American clients with Spanish property.
If no such will exists, the heirs may still invoke Regulation 650/2012 to demonstrate that the deceased's *habitual residence* was the US, applying US state law to the succession. We prepare the supporting Affidavit of US Law required by Spanish notaries.