The decision between inheritance or donation is a very personal one. When people prepare the documentation thinking about the assets that will pass to their heirs, they often ask us about the best option.
In this case, the donation could be said that, as it is necessary to do it during life, it allows us to enjoy in some way the last years with our heirs and the properties already distributed and granted among all of them.
As many of you will know, in addition to the difficult task of managing the inheritance, there is also the payment of a whole series of really complex taxes and formalities.
When opting for a donation, we must bear in mind that it is not free of these taxes for the transfer of property.
Below, we will tell you how the donation procedure is carried out and what taxes must be paid.
What is the difference between donation and inheritance?
We refer to the concept of donation in cases where the owner of a property decides to transfer the property to a new owner completely free of charge.
Generally, this new owner or owners are usually the heirs themselves and it is a way of granting the property during their lifetime.
In fact, the essential requirement of the gift of property is that the owner or donor is alive at the time the gift of property is made.
Is it common to opt for a gift of property?
Donation of property is a figure about which we often receive a lot of questions.
One of the problems that can sometimes arise in the distribution of an inheritance by means of a will is that certain disagreements may arise between the heirs.
The donation, apart from being a form of distribution during life that can give the opportunity to enjoy the property together, can also eliminate, so to speak, a source of conflict.
It is also possible to make the donation with the right of usufruct for life of the home. In this way, the parents have the right of usufruct for life for as long as they live, and enjoy the home until that time, even if it is no longer in their name.
It is important to know and bear in mind that the rules of inheritance are the same as those that apply to donation. In this way, it is ensured that no heir can be disadvantaged and that the distribution is equal among all heirs.
The procedure in the case of donation is also relatively simple. For this, all parties (donors and donees), generally family members, must sign the deed of donation before a notary, pay the donation tax and register the property in the name of the new owner(s).
What taxes are payable in the case of a donation?
At this point, we must differentiate between the payments to be made by the person receiving the donation, which are the majority, and what the donor would be subject to.
If there is one tax that stands out, and which generates some controversy as its amount depends on the Autonomous Communities, it is the so-called Inheritance and Gift Tax, which will be paid in all cases by the person receiving the donation.
Many communities, with the aim of making the payment of this amount easier or more accessible, offer reductions or donations from parents to children that can reach almost 100%.
In addition, the person receiving the donation must pay the “Plusvalía”, a local tax that is levied on the increase in the cadastral value of urban land from the date on which the owner acquired it until the date on which the property is transferred. It is therefore a direct tax based on the value of the property.
On the other hand, as far as the donor is concerned, he/she is obliged to justify the capital gain of the donation in the tax return. Only in the case of habitual residence and if the donor is over 65 years of age, he/she will be exempt from IRPF.
If you have any questions or if we can help you, please do not hesitate to contact us.
