Donate or leave the heritage in inheritance? This is the reflection to which many have been led as a result of the pandemic. And it is that the rise in mortality and uncertainty about the future caused 2021 to leave record figures for these operations. Specifically, 22.2% more inheritances were accepted in Spain than the previous year, up to 365,649. Donations, along the same lines, grew by 30.7% last year, to 174,866, according to data from the General Council of Notaries (CGN).
“The increase in inheritances is due to the effect of the pandemic. However, it has not been seen until 2021 due to a temporary offset due to the delay in its formalization, which can be months or years,” he explains. Maria Theresa Barea, CGN spokesperson. And the trend will continue to rise for at least a couple more years.
One delivery is made in life and the other is ‘mortis causa’. However, knowing the most beneficial option “will depend on the value of the goods, the degree of kinship – more expensive the more distant – and the bonuses, among other factors”, according to Barea. Although, the most important thing is to consult the conditions of each autonomous community.
“The inheritance and donation tax has a series of basic and common concepts. Then, the type of tax and the bonuses are regional competence”, he adds. That is to say, each community will be able to establish its own reductions that improve the state one, which establishes a rate of 7.65% to 34% on the liquidable base. In addition, as it is a progressive tax, the more you inherit, the more you pay.
For example, in the case of inheritance tax, if a lady dies at the age of 80 with an estate of 500,000 euros, leaving it in inheritance to a single child, he must pay zero euros in Andalusia, 711 in Madrid and 27,265 euros in Spain. Valencia, according to an example case carried out by Abel Marin, partner of the law firm Marín & Mateo Abogados. “Catalonia and Valencia are among the most expensive in these taxes”, clarifies the lawyer.
But, not everything is in the gift and inheritance tax. “The great black hand of inheritances are the expenses of the municipal surplus value, which depend on the municipalities, because it is really expensive”, he concludes Marin. To this are added the notary fees, property registration and personal income tax in the case of donations.
In the case of real estate, “in general, inheritance is better”, because the payment of personal income tax is avoided, according to Marin. And it is that, if the difference between the acquisition value of the property and the real value at the time of the donation creates a profit, it is taxed in the personal income tax of the donor. On the other hand, inheritances are not taxed on income.
Agustin Fernandez, general secretary of the Registry of Tax Advising Economists (REAF) also believes that, although it depends on each case, it is usually cheaper to inherit than to receive a donation. According to him, the determining element is that, in the inheritance tax, “there are reductions and bonuses in the state rule for kinship.” In Galicia, for example, the inheritance tax rate for spouses has a reduction of one million euros and rates from 5% to 18%, with a limit well below the state limit, according to the Panorama study of Autonomous Taxation and Foral 2022 of the REAF.
Something that also affects the way of planning the patrimonial transfer of real estate is to take into account the new reference value for its valuation, in progress since last January 1. This determines the taxable base of taxes such as donations and successions, in addition to transfers of assets, legal acts or real estate. “It is appreciated that it does not favor donations or inheritances, taking into account that slightly higher values have been registered,” according to the REAF general secretary. Marin It also gives as an example that, with the change in regulations, two houses in the same neighborhood, of the same year and square meters, one 1,000 meters from the other, will be valued in the same way, despite the fact that one is destroyed and squatted and the other in perfect condition and with good coexistence.
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The one who inherits can also renounce the property for personal, family or moral reasons. The resignations, specifically, grew by 25% in 2021, with a total of 56,557 operations, another historical record. This evolution could be related, not only to the increase in inheritances, but also to that of debts due to the crisis, analysts point out. In fact, the suspicion of financial burdens is one of the main reasons for giving up these legacies.
It is convenient to know, in these cases, that there is the possibility of accepting inventory for the benefit, which “allows you to receive it and stay protected from possible debts,” he says. Barea. While accepting an inheritance in a simple way responds to the obligations of the deceased with his own estate, in this way he will only respond with what was received from the deceased. Although, accepting always carries risks at the family level. 10% of cases end in conflict and 5% in court.