Transferring Property in the Valencian Community: Donation, Will, or Co-Ownership
Specifics of Civil Law in the Valencian Community
Valencia has its own legal and tax regulations regarding donations and inheritances. For this reason, the region can be particularly beneficial from a tax standpoint compared to other parts of Spain.
Property Donation – How Does It Work in Practice?
Donating a property means transferring ownership to your children during your lifetime. In practice, this involves immediate tax payment, but also allows the children to use the property right after the transfer.
What Tax Benefits Does Valencia Offer for Donations?
Valencia offers a special tax exemption for donations between parents and children. Currently, this exemption is up to €100,000 per child. In other words, no tax is paid up to that amount, and any excess is taxed progressively.
Example: Donation Tax on a €200,000 Property
If you donate a property valued at €200,000 to one child:
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The first €100,000 is tax-free.
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The remaining €100,000 is taxed at a rate between 7% and 10%, resulting in a total tax payment of €7,000 to €10,000.
Pros and Cons of Donating Property in Valencia
Pros:
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Legal certainty: the children become owners immediately.
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Generous tax allowance (€100,000 per child).
Cons:
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Immediate tax payment required on the excess amount.
Making a Will in Valencia – Key Aspects
A will allows you to maintain full control over the property until your death. Only then does the property pass to your children, and the applicable taxes are assessed.
Tax Benefits When Inheriting Property in Valencia
Valencia offers highly favorable inheritance conditions. For close relatives (children, grandchildren, spouses), the tax exemption is up to €100,000 per person. Additionally, there is a 95% tax reduction on the taxable base if the property is the heir's main residence for at least 5 years.
How Much Tax Is Paid on a €200,000 Inheritance?
If one child inherits a €200,000 property:
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The first €100,000 is tax-free.
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The remaining €100,000 benefits from a 95% reduction, resulting in an effective tax of just €500 to €1,000.
This creates a very significant advantage compared to donation.
Pros and Cons of a Will in Valencia
Pros:
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Minimal tax cost.
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Full control over the property until the end of life.
Cons:
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Property is not transferred immediately.
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Potential waiting time for the children to take possession of the property.
Other Beneficial Options Available in Valencia
Co-Ownership as an Alternative to Donation
You may also consider co-ownership. For example, parents and children can each own 50% of the property.
This way, both benefit from their own €100,000 tax exemption, which could fully exempt a €200,000 property from tax.
Cost Comparison for a €200,000 Property
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Donation: Tax ranges from €7,000 to €10,000
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Will/Testament: Minimal tax, usually around €500 to €1,000
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Co-Ownership: Potential full exemption (€0)
Summary – What’s the Best Option?
The most advantageous option in the Valencian Community, especially for properties worth €200,000, is to either make a will or set up co-ownership.
A will ensures the lowest cost, while co-ownership may completely eliminate the tax burden.
That said, the final decision should be based on your personal preferences:
Do you prefer to maintain full control over the property until the end, or would you rather transfer it right away?
❓ Frequently Asked Questions
1. Does the €100,000 exemption in Valencia apply per child?
Yes, each heir is entitled to an individual exemption of €100,000.
2. Can tax exemptions for donation and inheritance be combined?
No, the exemptions apply separately—one for donation and one for inheritance.
3. Does the 95% reduction apply to any property?
No, only to the main residence where the heir has lived for at least 5 years.
4. Does co-ownership require a notarial deed?
Yes, co-ownership must be formally notarized.