Many of our clients come to Fuster & Associates to get a clear answer about the matter of property purchase in Spain in the name of underaged children. This article wants to shed some light and clarify all possible doubts you may have on the topic.
As a parent you hold parental authority and are legal a representative of your minor children. And as such, you can acquire real estate for them. When you do, your minor becomes a property owner.
However, this situation must be carefully considered given the fact that both from a civil as well as from a fiscal point of view it may have significant implications:
What happens if in a future you want to sell or mortgage the property on behalf of your children? If that’s the case, you will be faced with two problems:
If the parents decide to “buy” the property and “deed” it in the name of the child nevertheless – something which as we have seen is perfectly valid from the civil perspective -, we must beware of the fiscal consequences of this transaction.
Where does the child’s money come from to buy the property in Spain?
If the funds belonged to the child for either having acquired it, through a donation, inheritance or having found it, he or she will not have any other fiscal obligations than those that correspond to any Spanish citizen – namely, paying the Tax on Patrimonial Transmissions.
But if the origin of the money doesn’t have a reason such those above, Treasury may consider that mom and dad have given the money to their child to proceed with the payment of the property and, consequently, will classify the child as a passive subject of the Donations tax.
In other words, the minor will pay taxes for the purchase of the property as well as for the donation of the money.
So before making the wrong decision and to ensure that such a generous gift for your children does not become a problem for you, talk to us.
We will be happy to analyse your situation and find the best solution for your family and your property ownership in Spain.
We want to help you navigate all the legal complexities that come with your home buying in Spain, but this article is legal information and should not be seen as legal advice.
“If the funds belonged to the child for either having acquired it, through a donation, inheritance or having found it, he or she will not have any other fiscal obligations than those that correspond to any Spanish citizen – namely, paying the Tax on Patrimonial Transmissions.”
How this “donation” is different from “donation” in your subsequent paragraph which makes the minor child the passive subject of Donation Tax?