Gifting property or money during someone’s lifetime is known in Spain as a donation or donacíon. This is an early inheritance.
Why would someone do this? Very simply, with inheritance you do not know what taxes you will pay. Making a gift or donation or early inheritance allows you to choose your timing to pay taxes.
At the moment, in the Valencia region taxes are the same for inheritance or donation to children. But for spouses there is no allowance for donation. Only for inheritance. Spain want to equalise many of the tax-free allowances so we expect taxes to increase by the Summer.
Today, I had a father and son who wished to discuss a donation or early inheritance. The father wanted to know if it was better to donate now to his son or leave it. In their case, the taxes are nil and you cannot get better than nil.
With the deeds and a SUMA or council tax bill, we were able to calculate the costs, including Notary, Land Registry and legal fees. As the family are in Spain for a couple of days, we arranged for them to do a power of attorney at the Notary. This is so we can deal with the transaction.
If they had been back home we would have emailed it to them. Both the person making the donation or early inheritance and the person receiving it needs NIES (which can be obtained with power of attorney). In this case we had them and they just paid an initial provision of funds to cover our initial work and the power. We will prepare for completion in a couple of weeks and all they need to do is pay the balance of funds. Afterwards we can arrange for the council tax, and utilities to be transferred into the son’s name.
As you can see from this case study, it is very straightforward (unless a Military Authorisation is needed if the property is in a rural area, and then it may take a bit longer) and we would encourage others to discuss this issue with us. Contact us please to explore this possibility before it is too late. You can see more information on our page on donations.