Gifting a Property in Spain to Children. Is it a Good Idea?

VALENCIA PROPERTY NEWS - Fuente: Spanish Solutions - 9th April 2020
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Gift­ing a prop­erty in Spain to Chil­dren is a very good idea in the Valen­cia re­gion right now. In the past two years we have been very busy with dona­tions in this re­gion.
Gifting a Property – Tax Free Allowances

Each child (chil­dren of the prop­erty own­ers but adults) gets a 100,000€ tax free al­low­ance at the present time in the Valen­cia re­gion. This gen­er­ally means that a prop­erty can be passed onto the next gen­er­a­tion with little or usu­ally no in­her­it­ance tax. It is not pos­sible to get bet­ter ever than no in­her­it­ance tax.
Recent Proposed Tax Changes

The gov­ern­ment have been in­dic­at­ing that they are in­tend­ing to re­duce sig­ni­fic­antly or erase tax al­low­ances in the Valen­cia re­gion. With everything on hold due to coronavirus, this will be post­poned prob­ably for some time.

Thus it has led to a lot of people think­ing we will pass on the prop­erty into our chil­drens’ names, with min­imal ex­pense. (There are still go­ing to be not­ary fees, land re­gistry fees, so­li­citor fees and some other small ex­penses but there will al­ways be these costs, now with gift, or in the fu­ture with an in­her­it­ance. The dif­fer­ence is that we do not know how much in­her­it­ance tax you will pay in the fu­ture. However, al­most cer­tainly a lot more.
Gifting to my spouse

I am wor­ried about something hap­pen­ing to me, can I gift to my spouse?There are no tax free al­low­ances for gifts or dona­tions between spouses in the Valen­cia re­gion. For changes of own­er­ship such as when a couple are di­vor­cing or two busi­ness part­ners are go­ing sep­ar­ate ways there is a method of di­vi­sion of prop­erty own­er­ship whereby only stamp duty and ex­penses are paid. But this would not be the best route if you have chil­dren to pass the prop­erty on.
What Can Be Done now?

Cur­rently, with everything on hold ex­cept es­sen­tial mat­ters, it is the best time to dis­cuss mat­ters and ar­range pa­per­work. Then as soon as lock­down is lif­ted we can ar­range powers of at­tor­ney for a gift to chil­dren, or as an al­tern­at­ive, Span­ish Wills.

Bear in mind that someone passes away, if they have as­sets in Spain a pro­bate will need to be done to be pass as­sets on, even to a spouse. It is not auto­matic. Also any in­her­it­ance tax has to be paid within six months. It is there­fore best to con­tact a so­li­citor fairly quickly after a death. It is wise to make a Span­ish Will as it saves hassle and ex­pense. We are cur­rently or­gan­ising a wait­ing list for these to be signed.

As now is a good time in the Valen­cia re­gion to con­sider donat­ing a prop­erty to your adult chil­dren, we are happy to cal­cu­late the costs free of charge.