Real estate expert Sergio Gutiérrez warns that giving a flat to a child without paying rent may be considered by the tax agency as a concealed donation, leading to tax payments.
The rental market in Spain has seen prices soar by more than 70% in the last decade, prompting many young people to seek alternatives for housing. One common solution is for parents to provide an empty flat to their children to live in rent-free. However, what seems like a gesture of family support can have unexpected tax consequences.
Real estate expert Sergio Gutiérrez has alerted in a video shared on social media that the tax authorities may interpret this free transfer as a concealed donation and claim the corresponding donation tax. The key lies in whether the child resides in a different property from their parents and does not pay any compensation.
“The tax agency can demand taxes if you live in your parents' house,” Gutiérrez points out, explaining that the tax authorities pay special attention to the transfer of assets between parents and children, both in inheritance tax and donation tax.
When is it considered a donation and when is it not
The fundamental distinction raised by the expert is clear: if the child cohabits with their parents in the same home, sharing the same physical space, it is not considered a donation from a tax perspective. This situation is common in any family living together and does not generate tax implications.
The problem arises when parents own an unoccupied flat and provide it to their child as their primary residence without any economic compensation. In that case, Gutiérrez warns that the facts may be sufficient for the tax authorities to claim the tax, even if the transaction has never been formalised in writing.
Both the tax agency and regional administrations pay special attention to the transfer of assets between parents and children, both in inheritance tax and donation tax.
The donation tax can be more expensive than inheritance tax
Gutiérrez's warning is not limited to the risk of the tax agency making a claim. The donation tax can be, in economic terms, more burdensome than inheritance tax, depending on the autonomous community where the property is located.
There are communities with significant discounts on inheritance tax, which in practice allow the inheritance of a parental property to have almost negligible tax costs. However, donating while alive can be more expensive, as communities may apply higher rates for donation tax.
“If the child uses the property without paying rent, the value of that use could be considered a periodic donation,” explains Gutiérrez. This would imply that, in addition to the possible tax on the value of the property, the tax agency could claim for each year of free use.
What alternative does the expert recommend to avoid the problem
To avoid tax surprises, Gutiérrez recommends formalising a rental contract between parents and children, even if it is for a symbolic amount. This way, the interpretation of concealed donation is avoided, and the situation is regulated with the tax authorities.
Another option is for parents to formally donate the property to their children, assuming the corresponding donation tax. This route may be more costly in the short term, but it avoids future risks and allows for planning the transfer of assets.
In any case, the expert emphasises the importance of consulting a professional before making decisions, as tax consequences can vary depending on the autonomous community and the personal circumstances of each family.
For those already living in a flat provided by their parents without a contract, the recommendation is to regularise the situation as soon as possible. A rental contract with a market-adjusted rent could be the simplest solution to prevent the tax agency from considering that transfer as a concealed donation.
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