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V0105-19 16 January 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · donación

Donation of property with reservation of future sale proceeds does not reduce transfer value for Income Tax

A taxpayer inquired whether the value of a property donation could be reduced by reserving the right to receive funds if their children sell the assets in the future. The Directorate General for Taxes (DGT) ruled that the donation is a gratuitous transfer and the transfer value for Income Tax purposes is the actual market value of the property, without applying such a reduction.

The question raised

Tax base of projected donations in Inheritance and Gift Tax, and transfer value for the purposes of determining the capital gain derived from the donation in Personal Income Tax.

The DGT's ruling

The donation is neither onerous nor remunerative; therefore, the tax base for Inheritance and Gift Tax is the real value of the assets without any reductions. For Personal Income Tax purposes, the transfer value in gratuitous transfers is that resulting from the application of the Inheritance and Gift Tax rules, and it is not appropriate to reduce the value by the amount the donor reserves for a future sale.

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