The number of property donations is on the rise in Spain. According to data from the National Institute of Statistics, while ten years ago 669,203 homes were transferred by donation, in 2023 the figure reached 974,843, that is, 45% more. Given this increase and the taxes that exist when it comes to inheritance, one of the most common questions that arise is whether it is better to donate or inherit a property.
An essential aspect to take into account is the type of donation made, since it may be collatable or non-collatable. According to Juan José Martín, lawyer at Marín & Mateo Abogados, “collatable donations are like an advance on the inheritance. The value of the donation is taken into account when distributing the assets, thus ensuring that equity is maintained among the heirs.”
While collatable heirs allow one of the heirs to enjoy the assets in advance without affecting the legitimate share of the others, non-collatable heirs are not included in the distribution of the inheritance. Even so, a very important fact is that they cannot exceed the legitimate share corresponding to the forced heirs. Martín explains that “it is not possible to donate more than what would have been left in the will, so it is crucial to make an adequate calculation of what was donated to avoid future conflicts.”
In any case, donations serve the purpose of protecting the legitimate portion, that is, the portion of the inheritance that corresponds by law to the forced heirs. “With a collatable donation, it is guaranteed that all heirs receive at least what is legally established, while a non-collatable donation allows greater room for manoeuvre as long as the legal limits are respected,” explains the lawyer.
The value of the donation is determined at the date of the inheritance, which can have a significant impact on the fairness of the distribution. In addition, “if the type of donation is not specified, it is presumed to be collatable,” explains the expert. That is why it is important that all donations are formalised by public deed and with a notary.
In the case of real estate, the valuation can be carried out by a notary or a lawyer, as it is usually included in the fees, or through an appraisal, which can have an additional cost of between 300 and 400 euro. The law firm stresses that, in any case, “it is essential to have specialised legal advice to make the best decision.”
However, in the case of donations of properties, as Abel Marín, also from the Marín y Mateo Abogado firm, warns, the most important cost is usually the tax cost, since it is treated in personal income tax as a capital gain, bringing unpleasant surprises when the donor has to pay high amounts in the income tax return the year after the donation. This taxable event does not occur when the donation is of money. Therefore, it is advisable to make the specific tax calculation for each property.
