Talking Legal

with Costasea legal advisers

Is it a good option to transfer your house in Spain to your children?

Transferring your assets to your heirs prevents them, after your death, from having to transfer, for example, your house to your name, since you have already done so during your lifetime and, therefore, this property will not form part of your inheritance after your death. In this way, your heirs can have tax advantages at the time of your death, in case you have more assets.

But what do you know about the taxation of this transfer?

You have to take into account that when making a donation, there are 3 different taxes that come into play in order to make a good decision, which does not involve a high economic cost for your pocket or that of the person receiving the donation. These taxes are: Donation Tax, Personal Income Tax, and Municipal Capital Gains Tax, if what is being donated is a real estate property.

But be careful, the responsibility for the payment of each of these taxes is different, some have to be paid by the person who makes the donation and others by the person who receives the donation.

For example, if you are a tax resident in Spain and you decide to donate your Spanish house to your son, you will declare the increase in value of your house, which is the difference between the acquisition value and the donation value, and you will do so when making your income tax declaration. Your son who receives the donation, on the other hand, will have to declare the Donation Tax, as well as the Municipal Capital Gains Tax.

It is advisable that you, when considering this type of operation that may affect your pocket, have an expert in the matter, who can advise you on the repercussions, and who knows the type of reductions that may be available, if, for example, the person receiving the donation is your son or daughter. This advice will ensure that all those involved in the donation are aware of the real financial cost of the operation.