Transferring property to a loved one is a significant financial decision. In Spain, one common way to do this is through a property donation ("Donación de Inmueble"). This is the act of gifting a property to another person, often a family member, without any money changing hands. While it can be an effective way to handle inheritance planning, it's a formal legal process with important tax considerations.

Why Choose Donation Over Inheritance?

Property donation is often used as a tool for estate planning. By gifting the property during your lifetime, you can pass assets to the next generation and potentially take advantage of regional tax allowances. It provides certainty and allows the recipient to benefit from the property immediately. However, the tax implications can be complex and vary based on your residency status and the relationship between the donor and recipient.

The Central Role of the Public Notary

In Spain, any property transfer, including a donation, is legally invalid without being formalised before a Public Notary ("Notario"). The Notary's role is crucial:

  • Drafting the Deed: The Notary drafts the official Deed of Donation ("Escritura de Donación").
  • Verifying Identity: They legally verify the identities of both the person gifting the property (the donor) and the person receiving it (the donee).
  • Ensuring Legal Compliance: They ensure the process meets all legal requirements and that both parties understand the consequences of the act.
  • Informing about Taxes: The Notary will advise on the taxes that must be paid as a result of the donation.

Understanding the Main Taxes Involved

A donation is not "tax-free." There are two main taxes to be aware of:

  1. Donation Tax (Impuesto de Sucesiones y Donaciones): This is paid by the person *receiving* the property. The amount varies significantly depending on the region (Canary Islands), the value of the property, and the relationship between the two parties. There are often generous allowances for close family members.
  2. Plusvalía Municipal: This is a local municipal tax paid by the person *receiving* the property on the increase in the land's value since it was last transferred.

Additionally, the person *gifting* the property may be liable for Capital Gains Tax, as the tax authorities consider a donation to be a "sale" at market value for the donor.

Clarity and Confidence at the Notary's Office

The signing at the Notary is the final, legally binding step. The Notary will read the entire deed aloud in Spanish. It is absolutely essential that you understand every clause, from the property description to the tax liabilities. As your professional interpreter, I can accompany you to the Notary's office to provide a live, accurate translation of the entire proceeding. This ensures you are fully informed and can sign the deed with complete confidence, knowing that your significant financial decision is being handled correctly.