Housing donation in Spain, what it is and how it is done
Housing donation in Spain, what it is and how it is done
Home donation is a situation that usually occurs between parents and children. It is presented as an alternative to inheritance, since with the donation you can enjoy the home before the owner dies.
The recipient and the donee participate in the donation of homes. This is a voluntary agreement that is normally carried out between parents and children. Through it, the owner of the home delivers this property free of charge to the new owner.
The donation of housing during life is made so that the children can enjoy a house given to them by their parents. In these cases, the Inheritance and Donation Tax has important discounts, depending on the Autonomous Community in which you reside.
On the other hand, taxes for the donation of a home must be paid in the Autonomous Community in which the recipient has resided the longest in the five years prior to this transaction.
The donation of homes also entails its application in personal income tax. This tax must be paid by the donor, who must declare this operation in his or her income tax return. If it is a habitual residence and if the donor is over 65 years of age, it will be exempt from personal income tax.
In addition, whoever receives the donation of the home must pay the Municipal Capital Gains. Finally, when accepting the home, the Donation Tax must also be paid, which varies depending on the value of the good received.
Requirements to donate a home in Spain
The requirements for this operation are very simple, so it will not be especially complicated to do it. However, before making any disposition of your assets, we recommend that you consult with an expert lawyer in the matter, who will guide you to make the best decision.
Now, as far as the requirements are concerned, we find that the donation must be made during life, otherwise we would already be in a different scenario such as an inheritance or legacy.
Having this clear, the first thing will be to request a Simple Note from the Property Registry, as proof of the ownership of the home, as well as that it is free of charges or encumbrances. In this order of ideas, the home to be donated must be up to date with taxes and other tax obligations and payment of supplies.
It will be essential that the donation of housing be made at a notary office where the donation will be accepted. There the new deeds of the home will be drawn up. Subsequently, it will be up to the new owner to register it in the corresponding Property Registry.
What taxes are paid when receiving a donation?
This is one of the first doubts that arise for the donee, just before accepting the home as a donation. At this point, it is worth noting that not only will he be subject to paying some tax but the donor will also be subject to paying some taxes.
In the case of the donee
Let’s start with the tax obligations that the donee must face.
INHERITANCE AND DONATION TAX
This tax taxes the transfer of assets free of charge. Its administration has been transferred to the Autonomous Communities, therefore, there may be reductions and bonuses depending on the region in question.
In the case of a home donation, it will be up to the donee to pay this tax only once to the Treasury delegation of the Autonomous Community where the donated home is located. As far as the amount is concerned, it will depend on the real estate reference value established by the cadastre.
MUNICIPAL CAPITAL GAINS
On this occasion, it is a tax that taxes the difference between the acquisition price of a property and its transfer price, and its collection is the responsibility of each municipality. This will be applicable when the value of the donated home is greater than what it had when the donor purchased it. The donee must pay it only once, when the donated property is urban.
In the case of the donor
Let’s see what taxes those who give up or donate the home are subject to.
INCOME TAX
This tax taxes the capital gains of individuals in a period of one year, collected by the Ministry of Finance at the national level. In the case of housing donations, the donor must declare in the year following the donation.
As an exception to this rule, we find that, if the owner is over 65 years of age and the donated property is his habitual residence, he will not be obliged to pay taxes.
What are the benefits of making a home donation?
For the transfer of property there are several alternatives, including sale, donation or inheritance, each of them with its advantages and legal consequences. Therefore, below we offer you a list of the main advantages of deciding to donate a home.
The first reason why many choose this option is because it translates into a way to help their loved ones, who may be in need of housing.
Another benefit of donation is that by delivering the assets while you are alive, future disputes, confrontations and problems between the heirs are avoided.
Furthermore, it is important to indicate that donors have the possibility of imposing conditions or deadlines to make the donation effective, as well as reserving some right over the donated home, this generally translates into the constitution of a usufruct.
What are the Deadlines for Paying Taxes on the Sale of Real Estate?
Each tax has its own due dates. Below we provide information on each of them.
- Income Tax. It is paid one year after the sale, together with the submission of the relevant declaration.
- Municipal Capital Gains Tax. It is paid within 30 working days after the sale of the property, although sometimes the terms may vary (you need to check with your local city hall).
- Property Tax. It has to be paid every year just for the mere possession of the property. When selling a property, the amount you have to pay in this year can be shared with the buyer depending on the time each of you owned housing.
Changes in the Payment of Personal Income Tax When Selling Real Estate in 2023
When real estate is sold, capital gains or losses are included in the relevant income statement. Thus, with the approval of the new General State Budgets, a number of innovations on property taxes are being introduced in 2023.
The new changes presented below relate to tax rates and include two new sections in the taxable base for the savings:
| Income Tax Line (IRPF) | Tax Rate (2022) | Tax Rate (2023) |
| Up to 6,000 EUR | 19 % | 19 % |
| From 6,000 to 50,000 EUR | 21 % | 21 % |
| From 50,000 to 200,000 EUR | 23 % | 23 % |
| From 200,000 to 300,000 EUR | 26 % | 27 % |
| More than 300,000 EUR | 26 % | 28 % |
If you decide to sell your property, then now you know what taxes should be paid when selling real estate in 2023. In our company, there are real professionals specializing in the effective sale of properties. We duly control every stage of this process and, if necessary, individual legal and consulting assistance can be offered for you.
