_ Soltalk February 2023 _ Soltalk 24 / 01 / 2023 16:52 Page 30
LawTalk
I am a British resident and I own Spanish property . Should I gift it to my children during my lifetime ?
If you gift Spanish property to your children , there are various things that one needs to think about .
As a Spanish non tax resident , regardless of whether you sell or gift your property , you will need to account for 19 % Spanish Capital Gains tax ( CGT ). A capital gain is calculated by taking the sale price and deducting the purchase price and related fees and costs .
In addition to the 19 % CGT , one needs to pay plusvalía . Plusvalía is essentially a municipal CGT .
If you gift your property during your lifetime , you will also need to account for lifetime inheritance tax ( IHT ) in Spain , often referred to as a ‘ donación ’ in Spanish . This is generally very low in Andalusia as there is a 99 % exemption when gifting to children .
This is only part of the picture for British residents in that British residents need to also consider their potential obligations and tax liabilities in the UK .
UK CGT is ordinarily charged at either 18 % or 28 % on second residential property , depending on whether the person is a basic or a higher rate income tax payer . An individual will normally be given credit for the Capital Gains tax paid in Spain to avoid double taxation .
No lifetime inheritance tax in the UK would be payable and this is known as a PET - a Potentially Exempt Transfer . Provided that you live for seven years after the gift , it would not fall into your estate for the purposes of calculating UK IHT .
With property values continuing to rise , there is an increasing number of people who need to think about IHT . UK IHT at death , above applicable exemptions , is charged at 40 % and 36 %. Each individual ’ s circumstances are different .
For a confidential consultation tailored to your situation please contact Sam Baker , English solicitor at De Cotta Law : sambaker @ decottalaw . net / telephone 952 527 014 .
De Cotta Law ( De Cotta McKenna y Santafé ) Mijas-Costa / Calahonda – Coín – Nerja – Tenerife
Nerja Office : - Calle Diputación 11 , 29780 Nerja Tel : + 34 952 527 014 www . decottalaw . com - info @ decottalaw . net Our hours are 9am to 4:30pm Monday to Thursday ;
Fridays 9 am to 2 pm
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