# Gifting property to children



## stevesainty (Jan 7, 2011)

We went to a breakfast seminar yesterday hosted by a company that offers legal and financial advice. It was mostly a meet and greet and let us know what they were offering.

One of the speakers was talking about inheritance tax and the possibility of gifting the property to your children now whilst the IHT rates were still unadjusted after the ruling that non-residents should have the same allowances as residents. The inference being that as Hacienda would be receiving less income for IHT they would eventually increase the rate of tax to compensate.

I would like people's opinions on the following please.

Scenario, married couple tax resident in Spain with property and small assets. One adult child tax resident in UK.

One of the couple dies and and their half of the jointly owned property passes wholly to the other. Because of the amounts and allowances no IHT is due but notary and legal fees and Plus Valia is payable.

The other half of the couple dies and all assets are bequeathed to the adult child. IHT is paid and also the notary fees etc. as above

The property is gifted to adult child now and gift tax is due, almost same as IHT, plus the usual notary fees etc.

On the face of it by gifting the property you are saving one lot of peripheral
fees but little else.

Would the adult, non resident child be liable to non resident property tax immediately?

Would the married couple have to pay any rent on the property to avoid any tax implications?

What would happen if the child pre deceased the married couple?

What would happen if the child got into financial difficulties and secured a loan using the property as collateral?

I have to say that before I embarked on such a course of action I would take professional advice; but I am interested to hear your thoughts, especially if you have already gifted your property.


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## Lynn R (Feb 21, 2014)

stevesainty said:


> Would the adult, non resident child be liable to non resident property tax immediately?
> 
> 
> 
> What would happen if the child pre deceased the married couple?


I don't know the answers to the rest of your questions, but I'm pretty certain the child would become liable to pay non-resident property tax immediately the property was transferred into their name.

What would happen if the child pre-deceased the married couple would depend on the terms of the child's will, would it not?

One more question has occurred to me, though - what would happen if the child were to be divorced and their partner could claim half of their assets, which would include the Spanish property?


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## Lynn R (Feb 21, 2014)

Just a further thought about the scenario of what would happen if the child to whom the property had been gifted were to pre-decease the parents - whoever inherited the property in their will would, of course, then be liable to pay Spanish inheritance tax on it.


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## larryzx (Jul 2, 2014)

Lynn R said:


> Just a further thought about the scenario of what would happen if the child to whom the property had been gifted were to pre-decease the parents - whoever inherited the property in their will would, of course, then be liable to pay Spanish inheritance tax on it.


 IHT will be charged as the owner will have died.

I knew a guy who transferred his home to his partner, who was was much younger. so paid the transfers costs to avoid the IHT. The partner died shortly after, so the original owner had to pay IHT. Its a 'calculated' risk.


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