In France, President Nicolas Sarkozy recently instituted changes to the French inheritance tax thresholds as part of the new 'Work, Employment and Buying Power' legislation.

It will mean that as much as 95% of the French population will no longer pay any inheritance tax. As part of the new laws the inheritance tax threshold has been raised from 50,000 to 150,000 per parent and for each child. For brothers and sisters and nephews and nieces the threshold will now be 15,000 and 7,500 respectively.

Additionally, up to 30,000 can be donated to each heir each year, however the recipient must still declare it as part of their income tax returns.

The laws, will also ease the burden on Irish buyers who own property in France.

In Spain, inheritance rules are similar to those in many continental countries.

Though while the system can be complicated there are a few things that can be done to make it easier on the recipients.

David O'Donnell from Tom McGrath & Associates, who specialises in this area, says the while in Ireland the rules are quite simple in Spain it ranges a lot depending on the recipient's relationship with the deceased and the amount of the inheritance. In Ireland if you are the child of the deceased you also can avail of a tax-free allowance of nearly 500,000, but in Spain O'Donnell reports that it is just under 16,000. While in Ireland there is a single band of 20% in Spain, after deductions, the rates vary from 7.65% to 34%.

For Irish buyers buying overseas property it is vitally important that you have a will in the country you are buying specifically for the property in that country, separate from your Irish will. This removes any ambiguity regarding who inherits the property. But there are regulations on who you can give it to. In Spain and France you can not disinherit your children and if you have one child in Spain they must get a third of the estate and half in France.

When calculating the tax due there are a number of provisions to bear in mind.

3% must be added to the property value to cover furniture and fittings. If the property is jointly-owned by a couple the remaining spouse only pays 50% of the value of the property, if the property was in the name of the deceased the remaining spouse is liable to 100%, therefore joint ownership is often a good option.

Each heir is also eligible to a tax-free allowance on the first 15,956.87 of their inheritance. If the heirs are also under 21 years of age they are eligible to a deduction of 3,990.72 for every year they are younger than 21, to a maximum of 12 years.

When you first buy the property O'Donnell points out that another option is to put the property in the name of your children so they are not liable to inheritance tax, but have it written in the deeds that you can avail of life interest or residency in the property. The same can be done for a surviving spouse to avail of the tax deductions if there are multiple children or heirs.

Although O'Donnell does point out that issues may arise later if the buyers decide to sell the property, as they would need the consent of all parties.

Therefore on a 1m Spanish villa, that is jointly owned by you and your spouse, upon your death you may decide to leave the property to the spouse and three kids.

30,000 is added on in furnishings and 50% goes direct to the remaining spouse.

After deductions the spouse has to pay 29.75% tax on 499,043.13, which is 148,465.33.

The three kids, after their deductions, have to pay 18.7% tax each on 155,709.80, which is 29,117.73. Although if one of them is only nineyears-old they avail of a deduction of 47,888.64 and only owe 18.7% tax on 123,778.03, which is 23,146.49. Altogether it comes to a combined inheritance tax bill of 229,847.28.

Alternatively you could just buy in a country that has no inheritance taxes for spouses or children, such as Switzerland, Monaco, St Lucia or in Bulgaria where the first 128,708 is exempt and after that it is only 0.7%.

All in all though, it's best to get a will and sort it out when you buy, therefore saving your loved ones a big financial headache later.

Further Information: Tom McGrath & Associates 01-661 0707;

www. tmsolicitors. ie;

Global Property Guide:

www. globalpropertyguide. com