In order to reach the ‘net’ estate that is to be divided among beneficiaries, it is necessary to first deduct from the estate any existing debts or loans belonging to the deceased. There are limits however and typically a ‘loan’ or debt to any beneficiary is not deductible.
The only exception to this is where the deceased owed monies to the Spanish Social Security system and in this case any person, including a beneficiary, who pays off such debts, may be able to deduct them from the estate before it is distributed to other beneficiaries.
In order for a debt to be deducted from the estate of the deceased it should be ratified by a public document i.e. an informal debt will not constitute a deductible debt for the purposes of Article 13.
As a result it is possible to reduce the value of a property by any mortgage that exists. This can radically reduce the value of any inheritance tax payable.
Article 12 ‘charges’ on properties may also be deducted but these are unlikely to be present in most typical scenarios.