Donate or leave in inheritance?

Details of a decision that can change your life

inheritance spanish will

Making the decision to donate implies being clear that it is a voluntary operation in which an asset is transferred from person to person without a defined price.

Although it means a complex step of giving, it is always appropriate to review the family situation of the people involved in each case because in any case, it involves donations taxes or inheritance taxes. 

The best question is whether the donor is aware of his/her true need for this asset, and if donating does not mean that he/she would drastically change its lifestyle. Given these circumstances, there are some agreements that can be reached between the donor and the beneficiary, which are valid while the owner is alive, being able to enjoy the usufruct at that time. In these types of agreements, the expenses of services and community will be borne by the usufructuary, while the owner will have to bear the costs of extraordinary expenses.

Donations taxes

Receiving a donation is not so simple, since the person who acquires rights over a property must also take care of the capital gains and donations taxes. It must be understood that “a donation is taxed where the person to whom it is destined resides,” and in the case of real estate donations, “taxes will be paid according to the location of said assets.”

Besides, the donor must also respond to the Treasury even if he/she has given up the house, including in its income return statement “the capital gain arising from the property, as if it were a purchase-sale operation.” Read more about a new capital gains tax to protect resources.

This detail is often overlooked when dealing with a transaction where there has been no exchange of money.

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Inheritance vs. donation

Donating or leaving the property as an inheritance are two economic options that must be considered carefully, to avoid making a decision without measuring the risks and to review the real alternatives of each option.

In the act of donation, the living will of the person is expressed, whereas in the case of the inheritance the intention may change, and the testamentary dispositions may vary (or disposing of the asset before its donation).

On the other hand, the donor should be aware that once the donation is made, the asset is no longer his/her own, and the beneficiary can use it as he/she pleases, without the consent of the owner.

Regarding inheritances, experts say that they imply the payment of less taxes, since they argue that “in most Autonomous Communities, taxation in the case of mortis causa transfer is usually significantly lower than in case of transfer through donation in life. “

And they would only deal with some tax cuts.

It is important to emphasize that in Spain, those who inherit must answer for the debts of the deceased, even with their own assets.

Also, the heir must pay the inheritance tax and the capital gains tax.

If you live in La Axarquía, in municipalities such as Competa, Frigiliana, Vélez-Málaga or Torre del Mar, you can contact us for accounting or solicitor services related with inheritance or donations taxes.

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

Author: Rosana Tejada
Biographical Info: Rosana Tejada Crespo is a tax advisor holding a Master’s Degree in International Taxation. She specialises in companies and freelancers, tax regulations concerning foreign employees (Beckham Law), non-resident tax, inheritance tax and Spanish income tax. She is one of the founders of Tejada Solicitors, which comprises a group of English speaking solicitors, economists and architects.

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