One of the questions we often receive from people, is what to do with their property in Spain. They wonder whether it is best to make a will and leave the property to the children, or to give the property to them as a gift while they are alive or even whether to buy the property in the children’s name.
But what surprises us most is that the most common question is what is cheapest from a tax standpoint!
It is crystal clear that this is very important, but it is also much more important that you have full legal rights and can sell the property if you wish or use your money to for example. travel back to your country, if you wish. You should also have the opportunity to live in Spain if it is your desire to leave without asking permission from your children, or worse, from their partners.
The difference between inheritance and donation is that in the event of inheritance, the heirs will receive the assets when you leave, and in the meantime you will be the full owner. Donation means giving the property away while still in this world.
Both options have advantages and disadvantages.
As always, it will depend on each case and the wishes of the owner and heirs.
A donation gives you more flexibility to distribute the assets to who we want, but the inheritance law provides some rules on how you can distribute your assets among your heirs.
Donating the property in Spain while you are alive will prevent you from selling the property, but you can always use an intermediate solution, which is to give your property to the one you want it to, but keep a lifelong right to live and use it. From a tax perspective, there is no general rule in Spain as a whole. In the case of inheritance or donation under similar circumstances, where the same family members either inherit or receive a donation of the same goods or assets, the tax payable will be different and will depend on the location of the property and other circumstances.
As a conclusion, we recommend spending some time thinking about what the best option will be for you and your property in Spain for the future, and then ask a professional about the cost of giving away your property now, or your children waiting until you are away before they inherit.