Foreigners in Spain: Giving a Spanish property to children or family.

Foreigners in Spain: Giving a Spanish property to children or family.

Question:

Dear lawyer,

I’m English, I have a house in Spain between Javea and Denia, valued about 195,000 €. I want to transfer this property to my 2 sons who live in the UK. I have been told that the best way is to gift it to them. Is that correct? What would be the tax to be paid?

Dear reader, thank you for your legal advice request.

As per the recent changes, it is true that the donation and gift is often the most tax efficient way to transfer a property in Spain to our family. Mainly because now the benefits of inheritance and gift tax, previously reserved for tax residents in Spain now apply to citizen’s tax resident in the European Union or the European Economic Area also.

But it is not always the case, as certain information that must be obtained and studied prior to making a gift, to see the real consequences of it.

1. Determine the value of the property to be donated. Donations and Gift tax to be paid depends on the value of the property. It is essential to calculate what is known as the minimum tax value, i.e. the minimum value that the tax authorities will consider acceptable.

2. Gift / donation Tax: As your children are living in a country of the European Union, they will benefit from the tax reductions foreseen in the Gift Tax Law of the Valencian Region, where the property is. These benefits are: a reduction of – 100,000€ (for each of them) on the value of asset donated, and a discount of -75% on the Gift Tax to be paid. In your case, as each child will receive half of the house, worth about 97,500€, there would not be Gift or Donations Tax to be paid.

3. Municipal Plusvalia: You must pay this local tax to the corresponding Town Hall, the amount of which will depend on the land value of the property donated, how long you have owned the property, etc.

4. Capital Gains Tax: This may be the most problematic tax. You should know that when there is a donation, the person who donates, although they are not receiving any money in return, must still pay capital gains tax, calculated by the difference between the purchase price (the price for which you bought, plus expenses) and the transfer value (the value given to the property in the donation – gift). Although it is possible that you should not pay this tax, if you are over 65 and you donate your habitual residency, etc.

 Therefore, it is possible that a donation is the best way to transfer your property to your children, but you should make a study of the rest of tax payable, and the legal implications before making a decision .

If you have any questions on this matter, please contact us

The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.

Carlos Baos (Lawyer)

Spanish Law firm solicitor attorney barrister.

Alicante, Denia, Costa Blanca Marina Alta

White & Baos 2015 – All rights reserved

12 thoughts on “Foreigners in Spain: Giving a Spanish property to children or family.

    1. Thank you for your message. Yes, he need to have a NIE if you want to donate or gift to him a property in Spain. He could apply for the NIE for free in the Spanish Embassy-Consulate in your country. Or if it is not possible, and he cannot come to Spain, if needed, we could apply for the NIE on his behalf. You could contract our office or send us an email to: info@white-baos.com.
      Regards,

  1. We are considering gifting our apartment in Catalonia to our son. Is this a difficult process and what taxes would we have to pay? The apartment has fallen in value, so there is no capital gain. We both have a NIE.

    1. Good morning,

      The process is not difficult at all.
      For the correct transfer of the property by means of a gift, a gift deed must be signed.
      Also, in Calalonia are important tax benefits for the gifts from parents to children. So depending on the value of the property, it may be no Gift Tax to be paid.
      Also, if the parents are co-owners of the property, each one could gift their part of the property. So, the children will be able to benefit for the tax reduction for the gift of each parent.
      Normally, there is not Gift Tax to be paid for the first 100.000€ ( for each parent).
      If you want, our law firm could assist you in the transfer and gift, in order to register the property in the name of your son. If so, please send us an email to info@white-baos.com, and we will confirm you the next steps to be taken.

      If you cannot come to Spain to sign, it could be done remotely, with the appropriate Power.

      We hope that this message is of help.

      Best regards,

  2. Hello
    I got an apartment in guardamar and I cannot get there because of covid and this brexit another added problem I have never made a will and I need to gift this to my son he has no NiE so I would have to instruct you to do this the apartment was €89,000 20 years ago it is probably worth the same what would the fee be for you to do this thank you

    1. Good morning,

      Yes, if you want to gift the property to your son, it is possible. And if the value of the apartment is under 100.000€ no gift tax will be paid.
      We will also inform you how you can get the NIE, or if you want, we can assist you to get it.

      We will send you an email with further information.

      Regards

  3. I want to gift my house in Spain Valencia state to my 2 daughters the house was bought in 2003 for 113,000 euro’s and worth about the same now. Can one daughter buy the other one’s share at a later date and can that be written in the gift with a legal requirement for this to happen within a stated time scale

    1. In the Valencian Region the children will not pay for gift for the first 100.000€, so you could gift the property to them without any gift tax.
      Also, if the value on the gift are the same than the acquisition value when you bought it would be no Capital Gains Tax.

      IN relation to the possibility to buy for one the other , yes it is possible.
      I am not sure the reason how to do it that way. If the idea is that one of them become sole owner, it may be better ways to do it.

      In any case, if you want our assistance, you could contact us at +34 966-426-185 or info@white-baos.com

      Best regards,

  4. I want to gift my house in Spain Valencia state to my 2 daughters the house was bought in 2003 for 113,000 euro’s and worth about the same now. Can one daughter buy the other one’s share at a later date and an that be written in the gift with a legal requirement for this to happen within a stated time scale I am UK citizen and non resident

    1. In the Valencian Region the children will not pay for gift for the first 100.000€, so you could gift the property to them without any gift tax.
      Also, if the value on the gift are the same than the acquisition value when you bought it would be no Capital Gains Tax.

      IN relation to the possibility to buy for one the other , yes it is possible.
      I am not sure the reason how to do it that way. If the idea is that one of them become sole owner, it may be better ways to do it.

      In any case, if you want our assistance, you could contact us at +34 966-426-185 or info@white-baos.com

      Best regards,

  5. Hi , would you kindly advise me regarding the best way to avoid property tax on puchasing a property in spain. I am in the final completion stage of selling my husband and i joint house in SPAIN, I intend to buy another property in a different region so that my young widowed daughter and grandchildren can still enjoy their holidays in SPAIN, My husband is nearly eighty and not a well man so he does not expect to visit SPAIN again.however we do have a joint bank account ,but i intended to purchase another property in her name only as my child. which i understand avoids tax up to 100euro.I know this seems a complicated scenario but i would appreciate your valuable advice on this matter. Many thanks ZERYL,

    1. Thank you for your message.
      To minimise the taxes, it must be studied your case in full.
      This depends on different factors: values of the properties, if the property is your main home or not, place of residency, etc.

      To study the best way to proceed we could study your case and give you the necessary advice.

      You could contact us directly at info@white-baos.com we will check your documents, etc. and let you know.

      Best regards,

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