Advantages:<\/p>\n
\u2714 They may qualify for certain regional tax reductions or allowances.<\/p>\n
\u2714 They are relatively straightforward transactions.<\/p>\n
\u2714 They do not trigger capital gains tax for the donor.<\/p>\n
Example: Parents give their child \u20ac80,000 to purchase their first home.<\/p>\n
<\/p>\n
Gifts of Real Estate<\/strong><\/span><\/p>\n In addition to the Gift Tax payable by the recipient:<\/p>\n \u2714 The property must be valued for tax purposes.<\/p>\n \u2714 The gift may affect the donor\u2019s income tax, and the donor may be liable for Personal Income Tax (IRPF).<\/p>\n \u2714 Municipal Capital Gains Tax (IIVTNU) may apply.<\/p>\n Important consequence<\/p>\n When a property is gifted, the tax authorities consider that the owner is \u201ctransferring\u201d it, as if it had been sold.<\/p>\n If the property has increased in value since it was purchased, the donor may have to declare a capital gain on their income tax return.<\/p>\n <\/p>\n Comparative Example<\/p>\n Case 1. Gift of \u20ac100,000 (Father \u2192 Son\/Daughter)<\/p>\n \u00b7 The child is liable for Gift Tax.<\/p>\n \u00b7 The father does NOT pay Personal Income Tax (IRPF) on a capital gain.<\/p>\n Case 2. Gift of a flat valued at \u20ac100,000 (Father \u2192 Son\/Daughter)<\/p>\n \u00b7 The child is liable for Gift Tax.<\/p>\n \u00b7 The father may have to pay Personal Income Tax (IRPF) on a capital gain.<\/p>\n \u00b7 Municipal Capital Gains Tax may apply.<\/p>\n \u00b7 The overall tax cost may be higher.<\/p>\n <\/p>\n Special case: Gifts to children to purchase their main residence.<\/span><\/strong><\/p>\n Two cases must be distinguished:<\/p>\n 1. A cash gift to purchase a property intended to be the recipient\u2019s first main residence.<\/p>\n 2. A gift of a property intended to be the recipient\u2019s first main residence.<\/p>\n <\/p>\n A 95% reduction in the value of the property may be available, up to a maximum of \u20ac60,000 (\u20ac120,000 if the recipient has a disability), in both cases, whether the gift consists of cash or real estate and whether the gifts are made in a single transaction, in successive transactions or simultaneously (as these are aggregated for this purpose), provided that the following conditions are met:<\/p>\n – The gift must be made to a descendant under the age of 37 or to a person with a disability rating of 65% or higher.<\/p>\n – The recipient\u2019s taxable income for Personal Income Tax (IRPF) purposes must not exceed \u20ac36,000 (after taking personal and family allowances into account).<\/p>\n – The money must be used to purchase a property that will become the recipient\u2019s first main residence. This intended use must be stated in a public deed.<\/p>\n – The property must be purchased within 6 months of the cash gift.<\/p>\n <\/p>\n \u2714 These provisions apply both to gifts consisting exclusively of money and to arrangements combining a gift of a property with a cash gift, whether the gifts come from the same ascendant or from different ascendants.<\/p>\n \u2714 For cash gifts, the reduction can only be applied to gifts made during the 6 months preceding the purchase of the property.<\/p>\n \u2714 As mentioned above, the impact on the donor\u2019s Personal Income Tax (IRPF) must also be taken into account when gifting real estate.<\/p>\n <\/p>\n <\/p>\n Differences Between Cash Gifts and Gifts of Real Estate (\u201cinter vivos\u201d) Although both transactions are subject to Inheritance and Gift Tax, their tax implications are very different. Cash Gifts Advantages: \u2714 They may qualify for certain regional tax reductions or allowances. \u2714 They are relatively straightforward transactions. \u2714 They do not trigger capital gains […]<\/p>\n","protected":false},"author":6,"featured_media":46113,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[1163,763],"tags":[1898,1882],"yoast_head":"\nDid you enjoy this article? Share it!<\/b><\/strong><\/h5>\n
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