Donating part of an inherited home may generate a capital gain in Personal Income Tax

Managing assets received through succession often involves complex patrimonial decisions. One situation that raises doubts is the possibility of donating part of the ownership of a home that was previously acquired through inheritance.

What the DGT has resolved

The Dirección General de Tributos (DGT) has determined that the donation of a share of participation in an inherited asset constitutes a patrimonial variation. This variation must be integrated into the savings tax base of the Personal Income Tax (IRPF).

To calculate the gain or loss, the following criteria must be applied:

• Acquisition value: This will be the value assigned in accordance with the rules of the Inheritance and Gift Tax, increased by the expenses and taxes inherent to the acquisition.
• Transfer value: This will be the value resulting from applying the rules of the Inheritance and Gift Tax, which cannot exceed the market value, and deducting the transfer expenses.

A fundamental aspect of this criterion is that, if the operation results in a capital loss, it will not be deductible for the taxpayer, given that the donation is considered a lucrative transfer.

What this means for you

If you are the owner of a home that you received through inheritance and you decide to donate part of it to a third party, you will be performing a transfer that has direct effects on your income tax return. The value you declared in the Inheritance and Gift Tax will be the basis for determining whether there is an economic benefit derived from this donation.

It is crucial to understand that the tax system does not allow for the offsetting of losses in this type of operation. If the transfer value is lower than the acquisition value, you will not be able to use that loss to reduce other capital gains in your savings base.

What is advisable to do

Before proceeding with the donation of part of an inherited asset, it is necessary to perform a precise calculation of the acquisition and transfer values. It must be verified that the market value is not higher than the value that will be applied for the transfer according to inheritance and gift tax regulations.

Since the nature of the operation prevents the offsetting of losses, it is necessary to assess the tax convenience of the donation against other alternatives for transferring ownership. Each patrimonial situation requires a detailed analysis of the values and associated costs.