Legal tips by White Baos Lawyers: Inheritance gifts in Spain

The highest body that brings together all notaries in Spain published a very enlightening report. The number of inheritances, donations as well as renunciations of inheritances has increased considerably in recent years. In some cases, reaching historic peaks. In view of the growing uncertainty due to the economic situation, etc, many clients have come to us over the last few years with a clear question: How do I plan my inheritance to save on the tax bill of my loved ones? Should I donate some of my assets before passing away? What are the key elements I should take into account when making such an important decision?

It is difficult to give an answer that applies indiscriminately to all cases. Generally speaking, inheritances tend to be fiscally more favourable than donations. However, the advantages of donations cannot be underestimated since they are much more flexible. For example, by allowing conditions to be attached to the donation or by reserving certain rights of the property (such as donating the bare ownership by keeping its usufruct). Donations also make it easier to help family members in need who would otherwise have to wait for a death to occur.

Although inheritances involve a much heavier paperwork than donations, it is often stated that they are less burdensome. What is the reason for this? Mainly, the tax regime, which is much laxer. Perhaps the most illuminating example is the absence of capital gains. When inheriting a property, the capital tax gain (purchase price minus acquisition price) does not exist. It is exempt. Depending on the case, this can lead to substantial reductions of tens of thousands of euros. A house purchased for 100,000 euros and donated for 180,000 euros would be taxed at 18,400 euros. Whereas if it is inherited, 0€ would be paid.

What is the key then? A detailed study of each case: number of heirs, amount of assets, original acquisition price, etc. Both options, inheritance, and donations, have considerable deductions and allowances: reduction for the acquisition of the main residence, kinship allowance, etc. No two families and situations are the same and for each case, there is a different strategy to follow.

If you want to plan your inheritance and reduce your potential tax bill, please do not hesitate to contact us. We will study your case and offer you expert advice on this matter.

You may be interested in the following services and articles:

Legal advice and useful tips concerning inheritance and probate in Spain: taxes, expenses, etc.

Acceptance of the inheritance by the heir in Spain. Consequences. Legal advice.

Contentious inheritances in Spain. Deadline to claim for an inheritance. Deadline to contest a Will.

Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

White & Baos 2022 – All Rights Reserved.

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