BarcelonaMiquel (a fictional name) is 36 years old and is about to buy an apartment in Barcelona, in the Sarrià neighborhood. His mother "has paid quite a bit more than half of the apartment" and he will take out a mortgage to secure the rest of the financing. "Without my mother's help it wouldn't have been possible, and we had to have many meetings with the bank to see exactly how we would do it," he explains to the ARA.
Donations from parents to children grew by 20% in the first quarter compared to the same period last year, according to the Notarial College. In the opinion of the institution's vice-dean, Raquel Iglesias, they have a clear objective: "To help the child or relative who wants to acquire a home". On the other hand, "donations out of pure generosity, without necessity, do exist, but we don't see them as much". However, what are the costs?
Inter vivos donations are subject to the inheritance and gift tax (ISD), just like inheritances. Each autonomous community can set the rates and exceptions it deems convenient. In Catalonia, there are favorable conditions if the donation is intended for descendants –not only children, but also grandchildren and great-grandchildren– and aims for them to obtain their first habitual residence.
In these cases, there is a 95% reduction of the taxable base, that is, the amount on which the tax to be paid to the public coffers is calculated decreases. Without reductions, the taxable base is the amount of money or the value of the donated property. However, the reduction has a limit: it only applies to the first 60,000 euros.
Always before a notary
The economist and tax expert Jaume Menéndez argues that the favorable treatment for these types of donations "has worked," but criticizes the fact that the Generalitat has not updated the maximums in accordance with the consumer price index (CPI, the indicator used to measure the cost of living) and the rising cost of housing, which varies depending on the territory. "It is obvious that if you give money to buy an apartment in Vilablareix (Gironès), you contribute a different percentage of the purchase price than if the apartment is in the Barcelona Metropolitan Area," criticizes Menéndez.
Menéndez insists that "donations must always be made before a notary" to be able to enjoy the tax benefits. Beyond the reductions for the purchase of a first habitual residence, donations to descendants are taxed less than the rest. The applicable rate has three brackets: it is 5% up to 200,000 euros, 7% up to 600,000, and 9% if it is higher. In contrast, the general scale ranges from 7% to 32%.
Is it more worthwhile to give the money to buy the apartment or the apartment directly?
The bonus for a first home applies whether the donation is money to buy it or the property itself. However, "donating the property has a tax disadvantage," warns Menéndez. Beyond the gift tax, the current owner must pay tax on the "potential capital gain" of the property, that is, the difference between the price the apartment had when they bought it and the market value it has at the moment they part with it.
"If it cost me 100,000 euros and, when I make the donation to my daughter, it is valued at 200,000, I will have to answer to the tax agency for those extra 100,000 euros," he exemplifies, even though the donation does not imply any economic income. He warns that "the tax impact can be significant," depending on when the apartment was bought in the first place.
And if my parents give me a loan?
Taking into account Miquel's personal circumstances, the experts recommended that, instead of accepting a donation from his mother, he should take out a loan at a 0% interest rate. This type of transaction is exempt from taxation, but, formally, it must be subject to the tax on property transfers and documented legal acts (ITP and AJD). The person who receives the money is the one who must settle the transaction – that is, inform the administration.
A private contract must be attached to the settlement specifying the loan repayment terms (for example, monthly, annually, or at the end of the loan). It is not necessary to prove the type of relationship because the ITP exemption applies as long as the loan is between individuals who are not acting in the exercise of an economic activity. Menéndez warns that "one must be careful" because a 0% loan can amount to a "fraud of law". "In my opinion, an agreement to return the money at the end of the loan – after fifty years, for example – is very likely to be classified as a donation," he points out.
Housing, an element of the perpetuation of social inequality
The OECD (acronym for the Organisation for Economic Co-operation and Development) warns that there are two factors that have a particular impact on the distribution of wealth: on one hand, donations and inheritances and, on the other, the transfer of home ownership.
"In several European Union countries, we observe how having received a substantial inheritance or donation has determined individuals' wealth more than the difference between having a university or primary education," it asserts in the report To Have or Not to Have: How to Reduce the Opportunity Gap, published in 2025. In other words, home ownership is one of the main obstacles to the proper functioning of the social elevator.