Donating property (donación) is the legal act of gifting real estate to another person, typically a family member, while you're alive. It's different from inheritance and has its own tax implications and legal process in Spain. This guide explains what you need to know.
Why People Choose Property Donation
Common reasons include avoiding future inheritance tax complications, helping children or family members financially, simplifying estate planning, and transferring property during your lifetime for peace of mind.
The Legal Process
Property donation must be formalized through a public deed (escritura) at a notary. The process involves property valuation, preparing the donation deed at the notary (similar process to Ayuntamiento dealings), both parties signing before the notary, paying donation tax (similar to inheritance tax rates), and registering the new ownership at the Land Registry. You'll need NIE numbers for all parties and current property deeds.
Tax Implications in the Canary Islands
The recipient pays donation tax based on property value and relationship to donor. Rates vary but can be 0-34% depending on value and family ties. Close family (children, spouses) get significant reductions. Consult a tax advisor as this can be substantial. The donor may also face capital gains tax if the property increased in value.
Costs Involved
Expect notary fees (€600-1,500), Land Registry fees (€400-800), donation tax (varies significantly), gestoría/lawyer fees (€500-1,500), and property valuation (€200-400).
Is Donation Right for You?
Consider alternatives like selling the property, keeping property in a will, or setting up a trust. Each has different tax implications. Professional legal and financial advice is essential. We help with notary appointments, translating the legal deed, ensuring you understand tax implications, coordinating with lawyers and tax advisors, and liaising with the Land Registry. Related: you may also need banking assistance for the financial transfers involved.