This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Receiving the gift of a property abroad

Chiquitita
Posts:3
Joined:Fri Apr 27, 2018 10:35 am
Receiving the gift of a property abroad

Postby Chiquitita » Fri Apr 27, 2018 10:42 am

I’m a Spanish citizen living, working and paying taxes in the UK since 1996.

My parents live in Madrid and they own a flat which they are considering donating to my brother, my sister and I so that each of us would own one third of the property.

Currently under the tax regulations in Madrid, both “inheritance” and “gift” tax are abolished, which means my brother and sister who are Spanish tax residents would have no tax to pay whatsoever if they were to receive this donation from my parents. These liberal tax regulations in Madrid are likely to change in the not-so-distant future and it is likely that inheritance and gift taxes will be reintroduced, so my parents are considering proceeding with the donation before this happens.

As I am a UK tax resident, how would receiving the gift of one third of a property in Madrid affect me?
• Would I have to declare this gift in the UK and would I have to pay tax on the value of my share even if the flat is not sold and my parents continue to live in it for some years?
• Or would I only need to declare it in the event that the flat were sold and I were to bring my share of the sold price to the UK?

I would be most grateful if someone could shed some light on this. Many thanks in advance!

The value of the property is around EUR 300,000 so my share would be around EUR 100,000

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Receiving the gift of a property abroad

Postby bd6759 » Fri Apr 27, 2018 11:15 am

There is no gift tax in the UK. UK Inheritance tax has no effect on assets owned by your parents.

You will be liable to capital gains tax when the property was sold. The gain will be difference between the price you sell it for and its value when it was gifted to you. It would be worthwhile getting a local estate agent to provide a valuation for you keep.

Chiquitita
Posts:3
Joined:Fri Apr 27, 2018 10:35 am

Re: Receiving the gift of a property abroad

Postby Chiquitita » Fri Apr 27, 2018 4:56 pm

Many thanks for your reply, I appreciate it.

Would the 7 year inheritance tax rule apply? If my parents were to pass away before 7 years after the donation (gift) of their property, would the Inland Revenue at that point charge me inheritance tax on my share of the property? I am not sure how this works given the property is in Spain and the donation take place in Spain.

Many thanks in advance.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Receiving the gift of a property abroad

Postby bd6759 » Fri Apr 27, 2018 5:09 pm

Inheritance tax is charged on the estates of the deceased. Not the living.

Chiquitita
Posts:3
Joined:Fri Apr 27, 2018 10:35 am

Re: Receiving the gift of a property abroad

Postby Chiquitita » Fri Apr 27, 2018 5:31 pm

Many thanks again. I'm clear on that point, yes...
Living people have the horrible habit of dying after a while. And the Inland Revenue has the horrible habit of charging inheritance tax on gifts that the living people made while they were still alive, if they made them less than seven years before dying.
I'm just not sure whether this affects gifts made by non UK tax residents to UK tax residents...

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Receiving the gift of a property abroad

Postby maths » Fri Apr 27, 2018 7:03 pm

Assuming your parents are not domiciled (or deemed domiciled) in the UK and the flat is in Spain then UK inheritance tax is completely irrelevant.

This is because the Spanish flat qualifies as excluded property.

The 7 year rule is also irrelevant.

JoeJoe
Posts:1
Joined:Sun Jun 03, 2018 1:21 pm

Re: Receiving the gift of a property abroad

Postby JoeJoe » Wed Jun 06, 2018 7:58 pm

I’m a Spanish citizen living, working and paying taxes in the UK since 1996.

the tax regulations in Madrid, both “inheritance” and “gift” tax are abolished, which means my brother and sister who are Spanish tax residents would have no tax to pay whatsoever if they were to receive this donation from my parents. These liberal tax regulations in Madrid are likely to change in the not-so-distant future and it is likely that inheritance and gift taxes will be reintroduced, so my parents are considering proceeding with the donation before this happens.
Hey! I ho I'm afraid that the situation for your relatives in Spain already has been changed:
"Inheritance tax (impuesto de sucesiones) in Spain is taxed at 7.65% on the first €7,933 of the total amount and can reach 34% and more for inheritance over €797,555 (depending on the degree of relationship)." It's the info from august 2017. prooflink - https://tranio.com/spain/taxes/ So it's better to check maybe they already should pay taxes for that property.


Return to “International Tax”