How to Avoid Expensive Inheritance Tax (Donation)

Posted in: Legal

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Inheritance or Donation?

We have had a number of people approach us in the last year to deal with donating their properties to their adult children, as the tax allowances in this Valencia region are currently very generous at 100,000€ tax free per adult child (as long as not step children and blood relatives). They also are very generous in the Murcia region if your property is there. The timing is much better for donation now rather than leaving it for inheritance.

How to Inherit Saving Inheritance Tax

If the tax value of the property in the Valencia region, not market value, is 200,000€ or less, and if you have say two children jointly, then there would be no donation tax to pay currently, only costs. Or even sometimes for one child no tax. Of course, we cannotget better than no tax, which is why it is a good time to transfer a Spanish property in this area to your children if you are thinking of it. Especially as the local Valencian government have said they are intending to erase tax free allowances (also if you are British, after Brexit they will disappear as the British will be non-European and it will revert to Spanish state taxes).

Costs of Donation

There will still be Notary fees, Land Registry costs, Solicitor fees, a town hall tax called plusvalía which is small and a few other minor things. We can calculate these for you from a copy of your deeds and your last SUMA (IBI) bill as this shows the cadastral value (from which we can calculate the tax value). We can give you the costs for free.

Your children would need NIE numbers and we would need to know if the clients would all come to Spain for completion or we would need to do powers of attorney at home if we send you the drafts, which is better.

How long does it take to arrange a Donation?

Timewise, once someone decides to go ahead, we need to make sure everyone has NIES, the clients pay a week before completion and the only thingthat generally delays it, is getting the powers of attorney executed as if done in another country they need sending ,away for a Hague Apostille for international use, whereas if done in Spain they are in the format already for Spanish use.

Please let us know if you are interested in donations as soon as possible, as it is urgent to get these transactions completed. This is a very effective way to save future inheritance tax.