Every year thousands of people have to file their Income Tax return in order to comply with their tax obligations with the Treasury, but this does not mean that we only have to pay for what we do, since there are certain regional tax advantages that can mean significant savings and that could even make our return payable. In Castilla y León, the Inheritance and Donation Tax regulations contemplate an almost total bonus (99%) on donations of money intended for the purchase of the first home, as long as they are carried out between direct relatives.
As stated the official information of Taxes of the Boardit is possible to deduct 99% of the Gift and Inheritance tax between parents and children, grandparents and grandchildren and spouses. This means that, in practice, the tax cost of the donation is drastically reduced, although it does not reach 100%.
The regulation is found in Title I, Chapter III of the consolidated text approved by Legislative Decree 1/2013, of September 12, which regulates the Community’s own and transferred taxes.
Donations to buy the first habitual home
In the specific case of donations of money intended for the acquisition of the first habitual residence, Castilla y León establishes a 99% reduction of the amount donated, provided that certain requirements are met.
In order to apply this reduction it is necessary:
- That the donee is less than 36 years old or has a degree of disability equal to or greater than 65% on the date of the donation.
- That the full amount of the donation be used to purchase the first habitual residence.
- That the home is located in Castilla y León.
- That the acquisition is formalized within the tax self-assessment period and that the deed expressly states the donation and its destination.
The maximum donation amount that can benefit from this reduction is:
- 180,000 euros in general.
- 250,000 euros when the beneficiary has a disability equal to or greater than 65%.
These limits apply whether it is a single donation or several, as long as they come from the family members provided for in the rule.
Furthermore, in general, in donations between direct relatives (spouse, descendants or ascendants) a 99% bonus is applied to the tax rate, as long as the donation is formalized in a public document.
|
Donation type |
Purpose of money |
Bonus maximum base |
Reduction / Bonus |
| Cash donation | Acquisition of first habitual residence (under 36 years of age) | €180,000 (€250,000 if disability ≥65%) | 99% reduction |
| Cash donation | Between direct family members (without specific destination) | No specific limit in the general standard | 99% bonus on the fee |
| Donation from individual company or professional business | Constitution or extension in Castilla y León | According to donated value | 99% reduction |
Be careful with the small print
As in other communities, the tax advantage is not automatically applied. The donation must be formalized in a public document, and in the case of money, the origin of the funds must be justified when required by law.
Furthermore, the tax must be self-assessed on time, although the final result, after applying the reduction and bonus, is practically symbolic.
Practical example
Let’s imagine that a mother donates 150,000 euros to her 30-year-old son to buy his first home in Valladolid.
If you meet all the requirements (age, destination of the money and formalization in a public deed), you can apply the 99% reduction on the 150,000 euros. Subsequently, when calculating the tax rate, the 99% bonus will also be applied among direct relatives.
The result: the amount to be paid to the regional Treasury will be minimal compared to ordinary taxation.
If the donation amounted to 200,000 euros, only the first 180,000 euros would benefit from the specific reduction for housing (unless there is a disability). The excess would be taxed in accordance with the general regulations, although the 99% bonus on the quota would still be applicable if it concerns direct relatives.
In short, Castilla y León maintains one of the most favorable regimes for transfers between parents and children, grandparents and grandchildren or spouses, allowing the tax cost of donating money to buy a home to be, in practice, almost non-existent, although technically it does not reach 100%.