Buying a property in your kids names

[RichardCoeurdeLion]

Recently I mentioned this in passing in reply to another posting.

I wondered if it was viable. The idea being that when you die the kids inherit, so why not buy it in their name from the start and thus avoid a lot of inheritance tax.

What do you think. or am I talking a load of ullage again

[Beachcomber]

No, this is a great idea in principle if you are confident it is right for your family situation.

However, even if you currently have a fantastic relationship with your children you have to consider what may happen if they should marry unwisely and you end up with the son or daughter-in-law from hell.

You could protect yourself to some extent by writing an usufruct clause into the escritura but if you are named as inheritors and the child(ren) should unexpectedly predecease you inheritance tax would then be payable.

If it all works out it can save your children a lot of money but it needs thinking about carefully and only you can decide.

[RichardCoeurdeLion]

As ever, Beach you've come up with the goods.

In my own case I thank my lucky stars I didn't do this. If I had, I would have been banned from the property a good while back. (must have been something I said )

[Mixter]

You could put it in the kids names...only dont tell them.

[mhic]

We bought our house in our kids names but our lawyer wrote up another contract which gives us the right to live here rent free till we die. It also means they cannot sell rent or make any changes to the property without our permission. Of course being as how the idjits never have a pot to pass water into we have to pay all the taxes including the tax on assumed profit's from lets, keep meaning to look into this.

Mhic

[RichardCoeurdeLion]

We bought our house in our kids names but our lawyer wrote up another contract which gives us the right to live here rent free till we die. It also means they cannot sell rent or make any changes to the property without our permission. Of course being as how the idjits never have a pot to pass water into we have to pay all the taxes including the tax on assumed profit's from lets, keep meaning to look into this.

Mhic

That was a good idea. The assumed letting tax, I think is refered to as Weath Tax and I think we're stuck with that.

[Beachcomber]

...our lawyer wrote up another contract which gives us the right to live here rent free till we die....

This is what I referred to in my post as 'usufruct' and it should be included in the escritura unless the 'other contract' was also notarised.

The notional income tax is called Renta. Wealth tax is patrimonio and is something different but is declared on the same form as long as you only have one property.

[RichardCoeurdeLion]

Thanks Beach,
Our community office do all the taxes for us. All 350 houses pay a fee for "fiscal representation" It's not compulsorary. What a nice little earner for the lawyer

[Beachcomber]

You do not need to have a fiscal representative and the form 214 is readily available and very easy to complete.

Whether it is worth taking the trouble to do it yourself depends on what you are being charged for this service

[RichardCoeurdeLion]

We are being charged 100 Euros. Sounds like a rip off

[mhic]

Because the house is in two names we have to pay two lots of taxes. Never tried dealing with the taxes myself but for the past two years we have paid a total of €94.20 in fees plus what the taxes came to. Since all bills are paid by me and we live here rent free I wonder if I could argue that we should not have to pay renta. May look for an accountant and see what they say.

Mhic.

[Beachcomber]

You are not paying two lots of taxes you are paying the total amount of taxes due divided by two twice. (If you follow what I mean)

Renta does not mean rent it means income tax which is payable even if the property is not rented out or is never even lived in.

€90 to €100 is a fair price to pay for someone to do this on your behalf.

[RichardCoeurdeLion]

Buenas Noches Beach

Just back from the villa (villa park, that is)

1-1 against Wigan. Hillareous match.

Anyway, this form, where do we get it please. In june we are debited the 100 for the previous year. The person doing it is pulling in 35,000 euros pa assuming he is doing the whole development. We don't supply any info whatsoever. Allthough I hate filling in forms the idea of saving cienis appealing.
What do you reckon

[Beachcomber]

You can download the form here:

http://descargas.aeat.es/formularios/ca ... od214e.pdf

and here is a contribution that I have posted several times in the past:

I have posted this twice before but I think Andalucia.com must erase old posts in order to save server space!! Anyway, here we go again.

The wealth tax (patrimonio) is calculated at 0,2%, up to €167.129,45 and on a sliding scale thereafter, of the highest of the three following values

Valor Catastral (rateable value)
Any revised value imposed by the tax authorities
Escritura value

The income tax (renta) is calculated at 25% of 2% of the valor catastral (1,1% if it has been revised since 1st January 1994).

The simplified 214 form can only be used if just one property is owned and a separate declaration has to be made in respect of each person named in the title deed with the base upon which the taxes are calculated divided by the number of owners. The taxes can be paid at any time during the year following that in which they become due at any bank.

If more than one property with a different referencia catastral is owned (even if it is just a lock-up or a garage) the declarations have to be done on form 714 for the patrimonio and for 210 for the renta and the declaration has to be made from the 1st May to 20th June in the year following that for which the taxes are due. It is still individual declarations for each owner. All of the properties may be listed on one form 714 for the patrimonio but a separate form has to be submitted for each property in respect of the renta.

If you rent out your property you should pay separate taxes on these rentals pro rata according to the number of days that it is rented.

Many non-resident property owners have ignored these taxes up until now but the tax authorities are now cross-checking property ownership with tax declarations so they are ignored at one's peril. Remember, they can claim back taxes for the past four years once you get caught.

Non-payment of these taxes will also prejudice any refund that is due from the retention made on account of the seller's capital gains tax liability when the property is sold.

and a previous thread that may help:

http://www.andalucia.com/forums/viewtopic.php?t=9260

The forms are also available in self-carbonated triplicate from any AEAT office.

If you do decide to do it yourself you will have to make sure that you cancel your self-appointed fiscal representative in writing or you may find yourself paying it twice.

[RichardCoeurdeLion]

Thank you very much, Beach