“I have a property by my own Spain. I have the 100 % of the ownership of the property. How much will it cost to change the title deeds to my wife’s name before I die, or to pass her 50 % of the property?”
Please, be informed that to pass the property to your wife is considered in Spain as a “DONATION”. And, in Spain, the taxes to pay for a donation are extremely high, as much as high as Inheritance Tax.
And, in case of “Donation”, then, we will have to be regulated by Donation tax, which is a regional tax, so, differently regulated depending on the regions.
In case of Valencia region, Donation has a bonification consisting in a free of tax up to 100.000 EUR from the amount donate between parents and sons.
But, this bonification in taxes is not applied in donations between spouses. So, in case of donation of part of the property owner to the other, being spouses, could derive in high tax amounts to pay.
Donation tax is even higher when co-owners are not married.
So, it is very important to get the proper legal advice when taking the decission to include spouses or any other person in the deeds.
One way cheaper than a Donation to pass a part, or the full ownership of the property to your wife, is making A SALE. The expenses in this case must be studied with the particular case, but to you to have an idea:
- 8-10 % of the share to pass to the other part as Transfer Tax
- Notary + Lan Registry = 2.000 EUR approx.
- 3% of the share to pass to the other part as Capital Gains retention
- Local Plusvalia: To confirm
- Legal Fees = To consult
CAPITAL GAINS IN BOTH CASES DONATION/SALE:
As well as per Sale process in case the solution adpoted is Donations, in case the value of the property has increased the value (as you informed us in your email), then, there may be Capital Gains involved. And the Capital Gains will be of 19-24 % on the gain. We need to check that.
If finally there is no Capital Gains to pay because we demonstrate to the administration a value with no profit, then, of course the amount to pay will be a lot less than the one quoted.
- Also, it is important to check if you are paying every year the Non Resident Tax. We have a lot of clients that they are not fulfilling this obligation, and If you are not paying this tax, then we would need to present these kind of taxes, for 4 years back with extra work, and extra expenses, and extra fines from the administration. If you are paying the Non Resident Tax declaration periodically, then, the amount quoted will be also very much reduced.
- Also, it is important to know that the value that we consider about the donation, will be the value that your spouse/receiver will use in case of sale in the future, so, again there will be Capital Gains to pay, so, it is important to make an study on which is the value, the most appropriate, to compensate Capital Gains on the donation, taxes on donation, and eventual reduction of Capital Gains in the future.