Placing the home in the children’s name before death is an option that many parents consider, but this donation does not go unnoticed and has consequences on the income tax return of the person who does it. And the reality is that people over 65 have an exemption from personal income tax that prevents them from paying tax on the gains they receive when donating their habitual residence. Of course, this is not a new measure and has specific requirements.
What the law says. The exemption is contained in Article 33.4.b of the Personal Income Tax Act, which excludes from tax the capital gains that over-65s move their habitual residence, and the tax agency includes it in income that is not declared in its manual for over-65s. But in principle donation describes the person who provides a profit for income tax purposes to the general public. V2752-21 on mandatory advice of (DGT). In response, from November 2021, Tributos already applied exemptions for a person over 65 who wanted to bequeath their habitual residence to their daughter.
revaluation weight. The benefit is especially noticeable when the home was purchased decades ago and has gained a lot of value since then, as the gain is calculated by subtracting its value from the value assigned to it in the grant. Let’s face it, the more the home appreciates, the more money the person who donates it stops getting integrated into their personal income taxes.
It must be habitual residence. The key requirement is that the property is counted as a habitual residence for tax purposes. According to the same tax agency manual, which governs personal income tax regulations, it requires that you have lived there continuously for at least three years, with exceptions such as marriage or job transfer, and that you continued to do so at the time of the donation or were at some point in the previous two years.
And the DGT re-applied it in its advisory V0217-26, dated February 4, 2026: A taxpayer over 65 years of age who has not lived in his house for more than 14 years, at which time it was rented out, cannot benefit from this exemption because more than two years have passed since it ceased to be his habitation.
The boy is not free. Although the father or mother saves personal income tax on the gain, the son or daughter who inherits the house will be subject to inheritance and gift tax. And they are not going to pay the same amount everywhere, because, if the child is in Spain, the donation of a property is usually taxed according to the regulations of the autonomous community where the house is located, which determines the reduction and the bonus, as detailed in a mandatory response from the Community of Madrid.
So the benefit exists, and the donor can benefit from their personal income tax by making this donation. But it is not an operation without taxes, as these are to be paid by those who acquire the property.
Picture | Moncloa
Genbetay Changes that will come to Treasury and Bijum in 2026: From January they will be able to see all transfers and they will follow family grants.
