Does the donation of a property have to pay any tax? What to do and how to proceed with the Tax Authorities? Clarify all doubts.
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If you are going to receive or donate a house, it is important to know, before proceeding, whether the donation of a property pays tax🇧🇷 This way you can avoid problems with the Tax Authorities if you do not comply with all obligations.
Donating a property is often a way of anticipating the division of assets that, otherwise, would only be distributed through inheritance. It may, for example, be a way of ensuring that a child receives a certain property.
For this reason, and also because it is a relatively common option for sharing assets in life, it is important to know whether a property donation pays tax and, if so, what to do.
How to donate a property?
The donation of real estate must comply with legal requirements🇧🇷 The delivery of the good is not enough for the donation to be considered made. The donation of a property is only legally valid if if signed by public deed or by authenticated private document.
Another point to bear in mind when talking about real estate is that these are not just houses or land. Any water that may exist on a property, trees, shrubs and natural fruits (as long as they are in the ground) are also immovable property.
By the way, it should be borne in mind that, in legal terms, a donation is a contract in which the donor delivers, free of charge, an asset of his or her assets or a right in favor of another person (the donee).
Does any donation of a property pay tax?
The donation of a property is always subject to tax. What varies is the amount of this tax. That is, the donation of a property is subject to the obligation to pay Stamp Duty, since it is a free transfer of a right over an asset.
Thus, the donation will always be taxed according to item 1.1 of the Stamp Duty General Table, that is, with the application of a rate of 0.8% on the equity value on the date of donation. For this purpose, the constant value of the matrix is ​​taken into account. In the case of omitted buildings or inscribed buildings without patrimonial value, this is determined through an appraisal.
To this rate of 0.8% is added a 10% rate in cases where the donation does not occur between a spouse or de facto partner, descendants and ascendants.
That is, the donation of a property to a child or a spouse only pays the tax corresponding to 0.8% of the property value. If the donation is made, for example, to a godson or nephew, the total stamp duty payable will be 10.8% of the value.
The obligation to declare and paying the tax on the donation is up to the donee🇧🇷
What to do to pay tax on donation?
If you receive a property by donation, you must first communicate this fact to the Tax Authority (AT) by the end of the third month following the respective donation. The declaration is made through Stamp Tax Model 1.
AT calculates the amount to be paid based on the amount presented in the declaration. It then notifies the person concerned to make the payment by the end of the second month following the notification.
If the amount of tax to be charged is over 1000 eurosAT allows payment in a maximum of 10 installments and with a minimum value per installment of 200 euros🇧🇷
The first installment must be paid in the second month following notification and the remaining installments must be paid every six months.
AT makes a discount if the tax is paid in full by the end of the second month following the notification. In this case, it gives a 0.5% discount for each installment into which the tax had to be divided, except the first.
What happens if the payment fails?
Failure to submit a declaration or delay in submitting it may result in a fine of between 150 and 3750 euros.
Failure to pay applies a fine that can vary between the amount of tax and double that amount.
Therefore, it is important to ensure the delivery of Model 1 within the established deadlines, as well as the payment (in cash or in installments) of the Stamp Duty corresponding to the donation of the property.
It is very common for parents to donate real estate to their children. This is a way of anticipating the inheritance or sharing while still alive. It is then that some doubts begin to arise: will the property donation pays tax🇧🇷 What amount to pay? Who is paid to?
Donating a property to the IRS?
A donation of a property not subject to IRS payment, since it is not an income. Therefore, you will not have to declare this property, but only the income you obtain from it.
For example, if you rent a house that you received through a donation, you will have to declare the rent value as property income.
It is also important to bear in mind that, when receiving a donation of a property, you will be responsible for paying all associated charges, namely in terms of property tax.
