Giving a house away?

[metalmonkey]

Hi

is it legally possible here to 'give a house away' my sister would like to sign her house over to me but I am concerned about tax implications, has anyone done anything similar

many thanks

[julian]

I think the tax implications might be higher for her than doing the paperwork to "sell" her the house

[marchamona]

I enquired about this a few years ago. According to laywer I could 'give' the house away, as long as I stayed alive for five years after. however, he didn't recommend it due to the complicated paperwork. Basically, I got the impression he didn't want to get involved.

[fljordan]

As a buyer you are supposed to pay only 7% (transfer tax) whereas as a beneficiary of a gift the rate depends on the value of the property. The scale is for instance for a property of € 55.920 13.6%, €63.905 14.4%, € 71.893 15.3% and so on.
Both cases requires also to pay capital gains or plusvalia.

Hope this helps

[chrissiehope]

We looked into this sort of thing about a year ago, tho we never got round to making a decision . This is what our lawyer wrote:

Legally we can separate the ownership and the possession. I would recommend to sell the ownership to [the person you transfer it to] and to keep the possession. With this option, you and [your partner] would keep the possession and [the person you transfer it to] would be the owner. With this option in the future [the person you transfer it to] will not have to do any inheritance because he would be already the owner. The possession is for life and [the person you transfer it to] will be able to cancel the possession just sending a death certificate to the land office without costs.

Example. If we say that official value of the property is 100.000 Euros. The value of the possession would be around 30%. therefore [the person you transfer it to] would have to pay transfer taxes just on the 70%.

Value property 100.000 Euros
Value property without possession 70.000
Transfer taxes 7% 4900 Euros
Notary and land office 800 Euros approx.
Legal fees would be around 600 Euros plus vat and expenses

Doin't know if this is the kind of transfer your sister had in mind, but it might be of some use

[El Cid]

I think these sort of transfers are limited to transfers between spouses or registered couples but I am not sure about that.

Yes, if you retain a "usufruct" on a property it reduces the value, depending on the age of the person holding it.

The taxes that Fljordan is referring to are the rates for Gift Tax which is part of the inheritance tax laws (ISD). Unlike the UK a gift in Spain is taxed at the time the gift is made and the inheritance tax rates apply. A further complication is that a sibling is in a higher tax category than children or spouses and the tax is increased by about 60%.

This is a case where foresight is cheap and hindsight seriously expensive. Making arrangements at the time of purchase is the best way, otherwise it is going to be expensive.

Sid

[chrissiehope]

Just to clarify SId - our transfer would have been to an offspring, and it was that basis that our lawyer was working on

[El Cid]

Yes, I guessed that but the original question was about a sibling.

When it comes to IHT and Gift tax, children, grandchildren and spouses are treated much the same way but siblings are not considered so generously and are taxed higher. If the person is not related they double the tax!

I am sure fljordan will correct me if I am wrong as he is a practising lawyer.

Sid