A family wants to donate an apartment valued at 250,000 euros to their children. The operation generates tax in the corresponding autonomous community. Madrid and Valencia apply different rules. The difference in the final amount can exceed 15,000 euros.
This article details a practical case. It explains how the Inheritance and Gift Tax is calculated in each territory. It includes the regional bonuses, the taxable base, the effective tax and the mandatory notarial procedures. The reader can use this information to decide where and how to transfer the property.
The practical case: donation of an apartment worth 250,000 euros
The parents are 57 and 59 years old. They have lived in Madrid for 20 years. They own an 85 square meter apartment in the Carabanchel district. A recent appraisal sets its value at 250,000 euros. They decide to donate it to their daughter Laura, 29 years old, who resides in the same city and works as an employee.
The objective is for Laura to have a home without needing a mortgage. The parents have already paid off their own home and want to reduce their estate to optimize the future inheritance. If Laura lived in Valencia and the apartment was located there, the cost would change significantly.
The tax is paid by the recipient of the property. In this case, Laura. The parents do not declare anything in their IRPF for the donation. The municipal capital gains tax that taxes the increase in the land value since the apartment was purchased must be added.
Laura has no relevant prior assets. Her taxable base in the Wealth Tax is less than 400,000 euros. This data reduces the applicable coefficients.
The legal basis and calculation method
Law 29/1987, of December 18, on the Inheritance and Gift Tax sets the general rules. The autonomous communities can modify reductions, bonuses, and rates. Madrid and Valencia have used this authority differently.
The calculation has several steps. It starts from the real value of the property. The Tax Agency accepts 250,000 euros if it coincides with the market value or with the established fiscal minimum. From that amount, outstanding charges are subtracted. In this case, the apartment is free of mortgage.
Reductions for kinship are applied. Direct descendants belong to group I. Madrid allows an additional regional reduction of 100,000 euros per donation to children. Valencia applies a reduction of 80,000 euros for those over 21 years old.
The liquidable base is obtained. The rate schedule is consulted. The scale combines percentages ranging from 7.65% to 34% according to brackets. It is then multiplied by a coefficient according to prior assets and kinship. Finally, the regional bonuses are applied that reduce the resulting tax.
The deadline to self-liquidate is 30 business days from the date of the deed. If exceeded, surcharges and interest are generated. The usual model is 650.
Tax calculation in the Community of Madrid
Madrid's regulations include a 99% bonus on the tax for donations to descendants. This measure was approved to facilitate the transfer of assets between direct family members.
Taxable base: 250,000 euros. Kinship reduction: 100,000 euros. Liquidable base: 150,000 euros. The full tax according to the state and regional tariff amounts to 19,800 euros. The multiplier coefficient is 1.00 because Laura's prior assets are low and the kinship is direct.
The 99% bonus is applied. The final tax for the Gift Tax is 198 euros. To this amount is added the municipal capital gains tax from the Madrid City Council. For an apartment bought 18 years ago with an increase in the cadastral land value of 110,000 euros and a rate of 25%, the plusvalía comes to 2,750 euros.
Total fiscal cost in Madrid: 2,948 euros. Laura submits the self-assessment to the Madrid Tax Agency. She receives the supporting document and takes it to the Property Registry along with the deed.
The process allows Laura to become the full owner in less than two months. She does not need to sell other assets to pay the tax.
Tax calculation in the Valencian Community
The Valencian Community does not apply a 99% bonus. Its own regulations establish a higher regional scale and partial bonuses. The reduction for donation to children over 21 years is 80,000 euros.
Taxable base: 250,000 euros. Reduction: 80,000 euros. Liquidable base: 170,000 euros. The combined tariff generates a full tax of 26,400 euros. The multiplier coefficient is 1.15 because Valencia applies somewhat higher scales according to prior assets.
The regional bonus for property donations reaches 45% in certain cases of family home, but it is not applied to the total base. After the calculations, the tax stands at 14,520 euros.
The municipal capital gains tax in Valencia capital, with an average rate of 28% and a similar increase, amounts to 3,850 euros. Total fiscal cost in Valencia: 18,370 euros.
The difference with Madrid is 15,422 euros in favor of Madrid. This amount can decide the timing and location of the donation.
Comparison and planning strategies
Madrid generates a cost of 2,948 euros. Valencia generates 18,370 euros. The 99% bonus explains almost all the difference. The rest comes from the initial reductions and the coefficients.
Families that can choose their tax residence have some leeway. Some parents wait for their child to register as a resident in Madrid for at least two years before signing the deed. Others first donate cash amounts, which also benefit from the Madrid bonus, and then the child buys the apartment.
If there are several children, the reductions are distributed. In Madrid each child can apply their own reduction of 100,000 euros as long as separate donations are made. In Valencia the limit is stricter and depends on the total value transferred in recent years.
The value of the property matters. If the Tax Agency considers that the declared 250,000 euros are below the real value, it can open an inspection. In Madrid inspections are less frequent than in other communities. Even so, it is advisable to provide an official appraisal carried out by a homologated company.
The municipal capital gains tax is calculated in both cases on the land. The corresponding town hall issues a settlement or allows self-assessment. The deadline is also 30 business days.
Mandatory notarial procedures
The donation of a property requires a public deed before a notary. A private document is not valid. The notary identifies the donors and the recipient by means of DNI or passport. It collects the exact description of the apartment with registry, cadastral data and an updated simple note with an age of less than 30 days.
In the deed the exact value of 250,000 euros is indicated and it is recorded that the donors are aware of the tax obligations that the operation generates for the daughter. The notary explains the consequences of the donation: waiver of future rights over that property and possible collation in future inheritance if not specified otherwise.
Once signed, authorized copies are obtained. With them, model 650 is filed with the regional tax office. Then the plusvalía is paid at the town hall. Finally, everything is presented at the Property Registry. The registration takes between 15 and 40 business days.
Usual documents: DNI of all, certificate of empadronamiento, appraisal, last year's IBI receipt, certificate of debts with the homeowners' community and proof of tax payment.
The notarial cost of the deed ranges between 400 and 650 euros depending on the value. The registration fees add approximately another 300 euros. These expenses are fixed and similar in Madrid and Valencia.
These procedures can be carried out telematically.