What is better to do with the house: donate it while you are alive or leave it as an inheritance? There is no doubt that real estate is one of the assets that most tends to inherit. The purchase of a home is an investment that, if there are no complications or other types of movements, not only the person who buys it will enjoy it, but also the rest of his offspring. Buying a house means, many times, buying a house for the whole family, now and the one to come.
For this reason, when the time comes to see which option is best to transfer said property, it is normal to consider several options in order to choose the most convenient one, for us and for those who are going to receive that property as their property.
Each option has its advantages and disadvantages, which we analyze below to provide mechanisms that allow us to make the best decision, which is always the one that best suits our particular case and our needs.
Advantages of donating a living home
Living donations allow assets to be transferred at any time, which facilitates this transmission in situations in which the recipient of the donation is going through a difficult time. In addition, different requirements or observations can be established in the donation, such as that the ownership of the property is transferred, but the donor continues to enjoy its usufruct for a certain time.
Opting for the donation allows you to distribute the assets avoiding later problems in inheritances and testament readings and, in addition, using a donation reversal agreement there is the possibility of recovering the donated property.
The main disadvantage is that in a donation the person who donates and the person who receives the donated property pay taxes, so it is paid twice. Of course, this mechanism is more favorable in the taxation of those who receive than those who donate.
Advantages of leaving the house in inheritance
The main advantage of inheritance is that, obviously, taxes are only paid by the inheriter and not by the one who writes the will, so the taxation affects fewer people. In addition, depending on the autonomous community, the heirs can enjoy certain reductions in the taxes to be paid and, obviously, the person who leaves the property in inheritance does not worry about anything other than writing the will and, sometimes, not even that. .
On the other hand, the main disadvantage is mainly that: until the owner of the property dies, he does not come to enjoy it and, as happens in so many cases, there may be problems in the distribution of the inheritance.
What taxes are paid on donations and inheritances?
Both in one case and in another, you have to pay taxes, starting with Inheritance and Donations. Since last year, the tax base to calculate how much must be paid is the reference value of the cadastre. The percentage is estimated according to the degree of consanguinity in the donations and is progressive in both cases. Likewise, in both cases it will be necessary to pay the municipal capital gains of the property.
Depending on the community of residence or location of the property, it is possible to enjoy a series of exemptions from the payment of Inheritance and Gift Tax, so it will be necessary to study in each particular case what is best for us at a fiscal level and what type of benefits we can accept, since many not only depend on the degree of family relationship between the person who gives or leaves an inheritance and the recipient, but also on the amount of what is inherited or donated.
On the other hand, in the case of opting for the donation, the person who makes it, that is, the donor, will have to declare in the IRPF and will reflect in the income statement the amount of this donation. This step is only mandatory in donations, not in inheritances.