What is a donation and how does it work?
A donation is the voluntary delivery of an asset from one person (donor) to another (donee), without expecting any compensation in return. This process is an alternative to inheritance, as it allows for the transfer of assets while parents are still alive. However, for the donation to be effective, the child must accept the received asset and it must be formalized before a notary. In some cases, special clauses can be included, such as life usufruct, which allows parents to continue living in the house during their lifetime.
Steps to gift a property to your children
If you decide to make a lifetime gift, these are the steps you must follow:
- Legal and tax advice: before starting the process, it is advisable to contact a lawyer or notary specialized in gifts and successions. At Llach Serra, we will guide you through the entire process to ensure it is carried out in the best possible way and with the lowest tax costs.
- Review of documents and charges: it is essential to have the title deed of the flat and ensure there are no outstanding debts or mortgages that could affect the donation.
- Property valuation: to calculate the associated taxes and fees, it is necessary to determine the value of the property that will appear in the deed of gift.
- Signing before a notary: the donation must be formalized through a public deed before a notary. Both the donor and the donee must sign this document.
- Property Registry: once the deed is signed, the notary will be responsible for registering the donation at the Property Registry so that the child appears as the new legal owner of the property.
Taxes and fees to be paid on the donation
When gifting a property to children, two main taxes must be considered:
- Gift tax: the child receiving the property must pay this tax, which must be settled within 30 business days of signing the deed. The amount depends on the autonomous community and the tax base, and can vary between 7.65% and 34%.
- Municipal capital gains tax (tax on the increase in value of urban land): if the gifted property is an urban property, the child must pay this tax, which is calculated based on the cadastral value of the land and the time elapsed since the last transfer.
- IRPF (Personal Income Tax): the donor of a property may generate a capital gain for IRPF purposes subject to tax.
Some autonomous communities offer bonuses or reductions in the payment of gift tax, especially if the gifted property is the child’s primary residence or if the gift is made under certain conditions.
Is it better to gift or inherit a property?
The decision to gift a property to children or wait for it to be part of the inheritance depends on several factors. Gifting a property during one’s lifetime allows for the early transfer of the property and avoids succession conflicts, but it involves the immediate payment of taxes. On the other hand, inheritance may benefit from broader tax reductions, especially if the property is left as the heir’s primary residence.
In any case, it is important to carefully analyze the costs and benefits of each option with specialized professionals such as those at Llach Serra, in order to optimize the transfer of the estate.
Gifting a property to your children is an option that offers many advantages, but it is also necessary to know all the legal and tax aspects it entails. Planning this process with the help of a professional advisor will allow you to avoid surprises and ensure that the donation is carried out efficiently and securely.
If you have doubts about the taxes or the procedures to follow, do not hesitate to contact our experts at Llach Serra. We will be happy to help you manage the gifting of your property optimally and without complications.