parents want to gift me a property what taxes do i need to pay?

Spanish Property Insight Forums Spanish Property Forums Property Questions & Answers parents want to gift me a property what taxes do i need to pay?

This topic contains 4 replies, has 3 voices, and was last updated by  Mark Roach – Spanish Tax Consultant & UK Limited Company Director 1 year, 2 months ago.

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  • #194384

    marky
    Participant

    hi there…can someone please help me, my parents want to gift me their property as they can no longer use it as much….but i still do and have been doing so for the last 30 years…its a flat in benalmadena…andulucia, its worth around 80,000 euro at the moment..just looking for a reasonably straight answer on what taxes and fee’s i would need to pay to have the property signed over to my name…i have a nie number and i am a joint bank account holder with my parents..if someone could please just let me know a rough idea that would be great because at the moment i have been told from as little as 2,000 euro up to 18,000 euro..i need to get some money sorted so i can get it done this year whilst my parents are still well enough to travel…many thanks in advance.

  • #194456

    Capo1
    Participant

    At 80K you will pay taxes of around 7%. Besides that you need a lawyer to do the paper work. They usually quote 1% of the purchase price but most will negotiate down to around 0.6 to 0.7% . Trouble is at 80K there’s not much in it for them so you may have to pay the 1%. There will also be notary fees, about 500 euros. Be sure to break the sale price down as house + furniture. So 70K for the house and 10K for the furniture. Taxes are only on the house. You should get out for around 7K Euros.  The biggest problem you will face is that if your parents have owned the house for 30+ years there will be capital gains tax to be paid on the profit. The lawyer will have to retain 3% of the sale price as ‘provisional’ tax. But, if your parents are elderly you need to do this now. Estate taxes in the event of a death will make the process much more expensive. Honestly, you need a local lawyer to advise you. On the plus side, Benalmadena is a nice place and prices are rising.

  • #194545

    Hello Marky,

    There are 3 ways you can complete this transaction and I will explain them to you that you may come back to me with any further questions?

    Option 1 : If they Gift you the Spanish property in the normal way then in Spain you have Gift Tax of Andalusia as this is the Region Benalmadena is located in Spain. Gift Tax will be charged to complete the transaction with the Spain Tax Office, Spain Notary & Land Registry. Additionally if your parents are UK Tax Residents along with yourself then you also have to consider the Tax implications in the UK. As the UK Government Taxes, UK Tax Residents on worldwide assets / Estate on death, there may also be Inheritance Tax To pay in the UK if your parents do not survive more than 7 years after completing the Gift in Spain to you.

    Option 2 : If you action a property Transfer as the other Member suggests, then as the Buyer there would be around 7% Property Transfer Tax to the recipient on receiving the property, and also a 3% Withholding Tax by Spain Tax office on the €80,000 (€2400), Spain would only pay your Parents €2400 back if no Capital Gains Tax to pay in Spain on Transfer to you.

    Option 3 : If you set-up a UK Limited Company and invested the Spanish property into a UK Limited Company, and once the property registered to your UK Company gift the UK Company with the property held within it back in UK. This would also protect you from any Spanish Wills requirement and Spanish Inheritance Taxes in the future.

    Using this type of transaction would not have the 7% Spanish Property Transfer Tax charged to you unlike point 2.

    • #194622

      marky
      Participant

      thanks both for your replies, at the moment i am looking at the gifting option i have been told by a resident in the apartment block that the local gift taxes only apply  if the property value is in excess of 175,000 euros and i would only be eligible for the legal, land registry and notary fee’s but then another neighbour has told me that i would indeed be liable for around 7% tax as well as fee’s and until i go out in easter to start chasing things up for myself i only have the info you guys have give me and the shady advice off two old ex-pats..if someone could clarify the gift tax option and related expenses that would be music to my ears, thanks again i really appreciate it..all the best..marky.

  • #194623

    Hello Marky,

    If you select to go down the Gifting (Option 1 above) of the Spanish property from your Parents to yourself with a property value around €80,000 your costs are around the following.

    A: Spain Lawyer & Tax Adviser Legal Fees – Around €3500.

    B: Notary & Land Registry Fees – Around – €1500 combined

    C: Plusvalia Tax which is a Land Tax payable to the Town Hall for the number of years your parents owned the Flat in their own names (but some Town Halls only charge this up-to a maximum ownership of 20 years)

    D: The final part is the rate of Spanish Tax on the Gift from your Parents to you on the €80,000 they are transferring to you. Spanish Gift Tax and Spanish Inheritance Tax in many situations in Spain are the same Tax Rates, as the Spain Tax Office did this to stop people Gifting their Spanish property to family members to avoid Spanish Inheritance Tax.

    If you receive a Spain Gift from your Parents then you are classed as blood line relative and the Non Resident Tax rate would be high. As the property is under Andalusia then you may be able to use the local Tax Laws in this Region and use higher allowances than using the standard Tax rates for non Residents transactions.

    If you instruct a Spain Tax expert for this transaction I am sure they could find both Tax scenarios in your family situation to see which is more cost effective, non Resident Gift Tax, or the Regional Gift Tax of Andalusia.

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