December 20, 2007 at 9:15 am #53527
I have been advised to transfer our apartment which we have recently purchased from our names to our daughters. I have made an enquiry about this and have been told that it will cost approximately 10% of the value again to do this. Is this correct and if so is there no other way.
December 20, 2007 at 9:28 am #76680
It is correct. As far as I know there is no other way.
December 20, 2007 at 11:30 am #76688
Please ensure if by transferring you not creating a legal situation where the Tax man thinks you have transferred equity etc. Does the 10% that you say include such cost/provisions ????
December 20, 2007 at 11:39 am #76689
The 10% will be made up of 7% transfer tax 1% lawyer fee and some other bits for notary charges etc!!!
You can get around it by giving power of attorney for the property to your duaghters and they then effectively own it and can do what they want. The only danger is if they upset you, you can cancell the power…….! 😀
December 20, 2007 at 4:12 pm #76691
Inez I don’t think that would negate inheritance tax or would it ❓ As for falling out with daughters its either them or the cat and dog home and senile dementia has not quite set in yet so still in control.:lol:
December 20, 2007 at 5:27 pm #76692jwc wrote:I have been advised to transfer our apartment which we have recently purchased from our names to our daughters. I have made an enquiry about this and have been told that it will cost approximately 10% of the value again to do this. Is this correct and if so is there no other way.
I wonder why you have been given this advice, you say you”recently ” purchased the apartment. Why was this advice not given before?,also what ages are you’ , If relatively young I would leave things as they are.
10% expenses just about covers it, so not cheap.
Who has given you this advice? A lawyer or an agent looking for some backhanders from interested parties. In Spain people do not work for nothing, money is the new god.
December 20, 2007 at 6:07 pm #76694
JWC, the advice given is good. You save inheritance taxes on the share under the name of you beneficiaries and they would only have to pay for the inheritance of the share of the deceased (yours).
Inez’s suggestion will not waive the ineheritance tax but it will allow full controlof the property by your offspring.
Your lawyer should have advised you this before completion, not after as, you effectively have to pay 10-11% costs and taxes now.
December 20, 2007 at 6:36 pm #76695
It could also get complicated if the house is in your Daughters name and she goes through a nasty divorce…never say never!
December 31, 2007 at 6:09 pm #76821
There is a much cheaper way to do it, unless there are reasons behind it that dont make my proposal interesting:
You can do a private contract and do a official copy to keep the date officially recorded. This would keep the house registered in your name but they would have a contract that in the future can be registered, if need be. No taxes today; maybe taxes tomorrow.
Also keep in mind inheritance taxes in Spain are likely to dissapear (they have already in some regions like Madrid)
In any case, the main thing is to know WHAT do you want to achieve with this transaction and perhaps another solution can be found.
December 31, 2007 at 8:40 pm #76824
abolex: I like your advise. The money in my pocket today is worth more than what it would be in future on cash discounting.
When, the tax becomes due in future the tax regime may change or it could be used as part of the sales negotiations.
January 1, 2008 at 8:44 pm #76862
I think the best legal advice is to act on how the laws are now and not to wander amid speculation on how laws will be someday in the distant future. Wealth tax is a firm candidate of being abolished throughout Spain regardless if PP or PSOE win this year. However, IHT might or might not follow suit in the distant future.
Currently if you want to waive te hefty Spanish IHT it is advisable to lodge a percentage (tipycally) 50% under the name of your children. When the parent dies the beneficiry only has to pay IHT on the share of the deceased. This is best done at completion of the property not after to save precisely the transfer costs & taxes.
As Katy very wisely points out the biggest problem is if your children are married and they divorce. However, the default legal UK marriage system is that of separation of assets not community but their is always a risk on filing divorce to claim on the wife’s/husband’s Spanish property share.
January 4, 2008 at 6:02 pm #76909
If a property was worth 200,000 today and is transferred to two children at a cost of say 20,000. Then in 20 years time this property is worth 300,000 (well you never know) and the Euro is par with the Sterling Pound (again you never know) would the children be happy or sad if they had to sell it.
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