Spain Allows Citizens Over 65 to Transfer Property to Children Tax-Free

Changes Affect Citizens Over 65

In Spain, citizens over the age of 65 are allowed to transfer residential property to their children without paying capital gains tax (IRPF), the General Directorate of Taxes (DGT) has confirmed. The exemption applies only to properties that have been used as the owner’s primary residence.

When the IRPF Exemption Applies

The Spanish General Directorate of Taxes (DGT) clarified the conditions under which property can be transferred to children without paying capital gains tax. The main requirements are that the owner is over 65 years old and that the apartment or house has been used as the primary residence. In this case, any gain from the change in the property’s value is exempt from IRPF, as established in Article 33.4.b of the Spanish Personal Income Tax Law.

The tax treatment for property transfers is equated with that of a sale: in both cases, potential gains are fully exempt from taxation. The exemption applies to transfers of full ownership and in situations where the former owner continues to live in the property after transferring it to the heirs.

How Capital Gains Are Calculated When Transferring Property

When property is transferred, the owner’s asset position changes, which usually results in a gain or loss. Capital gains are calculated as the difference between the property’s acquisition cost and its value at the time of transfer.

For a sale, the acquisition cost includes the purchase price, transaction expenses, and investments in property improvements. When transferring property to children, these amounts are calculated according to the rules of inheritance and gift tax, and cannot exceed the market value of the property.

This approach allows the correct determination of whether the operation is exempt from income tax and helps avoid mistakes when planning property transfers to children.

Basic Inheritance and Gift Tax Rates in Spain

Capital gains in Spain (ganancia patrimonial) are included in personal income tax (IRPF) and taxed progressively. This applies to gains from the sale of real estate, shares, investment funds, and other assets.

Progressive IRPF Rates on Capital Gains:

• Up to €6,000 — 19%

• €6,001–50,000 — 21%

• €50,001–200,000 — 23%

• €200,001–300,000 — 27%

• Above €300,000 — 30%

Rates are applied to net gains — the difference between the sale price and the acquisition cost, including purchase expenses and improvements.

For residents of Spain, the tax is calculated based on the difference between the sale price and acquisition cost, including expenses and improvements. For non-residents, fixed rates apply: 19% for EU/EEA citizens and 24% for others. The tax is reported in the IRPF declaration for the year of the sale or property transfer.

Practical Importance of the Tax Exemption for Families

Confirmation of the IRPF exemption is significant for planning intergenerational property transfers. It allows citizens over 65 to distribute assets in advance and manage their wealth without additional tax burden.

Many families choose to transfer property during the owner’s lifetime to simplify future inheritance procedures and reduce the risk of conflicts among heirs. The tax exemption makes such transfers more advantageous, especially if the property has appreciated significantly since purchase.

Experts also note that while the owner does not pay IRPF, the recipient of the property must pay inheritance and gift tax. The tax amount depends on the rules of the specific autonomous community in Spain, so it is important to assess all potential tax consequences before transferring property.