Over the past ten years, the Housing donations in Spain increased by 45%, according to data from the National Institute of Statistics (INE). This notable increase reflects a change in strategy among many families, who choose to donate their assets during their lifetime with the idea that This provides more advantages over inheritance.
However, even if the donation seems more beneficial, In some cases, this involves a higher tax burden than that of inheritances.making it essential to assess the tax implications before making a decision.
More and more families are choosing to advance their inheritance in Spain
So far in 2024, the House donations in Spain recorded an increase of 14.3% compared to the previous year, according to the latest data from the INE. This growth reinforces a trend observed in recent years, where more and more families are choosing to advance real estate transfer as an estate planning strategy.
The tax advantages of donations can be, in certain cases, more favorable than those of inheritances or sales. Furthermore, in a stable economic context, many families choose to donate to avoid future tax liabilities or possible inheritance conflicts.
We offer below the considerations to take into account, according to the real estate portal Photohousewhen donating housing
Key conditions for donating a house
- The donor must be alivesince the donation can only be made during the lifetime of the owner, unlike an inheritance, which occurs after death.
- The donor must be the owner of the property, which is verified by the property registry, demonstrating that you have the legal right to transfer ownership.
- The accommodation must be free of debt and up to date with IBI payment, ensure there are no pending fees that could complicate the donation process.
Collatable and non-collatable donation
When you make a donation, you must decide whether it will be collectible or not. Recoverable donations are counted in the inheritance, ensure that all heirs receive their fair share.
THE not collatable, however, they are not added to the distributiongiving more freedom to the donor, but still respecting legal limits. It is essential that donations are formalized before a notary to avoid disputes and guarantee that they comply with what the law establishes.
Donating a home: taxes, exemptions and tax benefits for immediate family members
The donation is subject to inheritance and gift taxes.the percentage of which depends on the relationship. Donations between close relatives, such as children or spouses, can benefit from tax reductions, particularly when it concerns the first habitual residence, with a 95% reduction in property value if certain conditions are met.
This makes gifting a tax-efficient alternative to inheritance in many cases.
- Inheritance and gift tax (ISD)
- Who pays for it? who receives the house.
- What determines the amount?
- The value of the donated house.
- The degree of relationship between the donor and the donee.
- Bonuses or exemptions applicable in the autonomous community.
- Municipal capital gains
- Who pays for it? who transfers ownership.
- What determines the amount? The increase in value of the land from the time the donor acquired the house until he or she makes the gift.
- Application: This tax is applied in almost all municipalities in Spain.
- Personal Income Tax (IRPF)
- Who pays for it? The donor.
- In what cases is he paid? If the value of the donated house is greater than the value at which the donor acquired it, it is considered a capital gain.
- Exceptions:
- Personal income tax is not paid if the donor is over 65 years old years and donates his habitual residence.
- Personal income tax is not paid if only bare ownership is given and the donor retains the usufruct.
It is important that the donors are properly informed about the types of donations and their implicationsboth legal and tax, to ensure that your wishes are carried out without harming your heirs or generating unnecessary tax burdens.
