It is one of the most common questions in wealth planning: is it better to gift assets during your lifetime to your children, or to leave them as an inheritance? There is no single answer: it depends on the type of asset and on the family situation. Here is what to look at in the Valencian Community.
In this article
- The short answer
- Inheritance and Gift Tax
- The requirements to keep the relief
- The donor's income tax: the difference almost nobody sees
- The local capital gains tax
- A worked example
- When giving during your lifetime usually makes sense
- When it usually makes sense to wait for the inheritance
- What to bear in mind before signing
- Frequently asked questions
The short answer
In the Valencia region, between parents and children, Inheritance and Gift Tax comes out almost the same either way: both get a 99% relief. Where they part company is in two taxes many people overlook: the donor's income tax and the local capital gains tax (plusvalía municipal) paid on property. That is why, for a flat that has gone up a lot in value, inheriting is usually much cheaper than giving. With money, on the other hand, giving costs almost nothing if it is done properly.
Inheritance and Gift Tax
Inheritances and gifts pay the same tax, at rates from 7.65% to 34%. What changes the result are the Valencian allowances and reliefs:
| Gift | Inheritance | |
|---|---|---|
| Relief between parents, children, spouses, grandchildren and grandparents | 99% | 99% |
| Allowance for a child aged 21 or over | €100,000 | €100,000 |
| Allowance for the deceased's main home | Does not exist | 95% of the value, up to €150,000 per heir |
| Siblings, nephews, nieces, uncles and aunts by blood | 25% relief from 1 June 2026 and 50% from 1 June 2027, either way | |
| Deadline to file | 30 working days | 6 months |
For a child under 21, the gift allowance goes up by €8,000 for each year short of 21, up to €156,000. And note: the €100,000 allowance is counted per donor, adding up everything they have given you in the previous five years. If both parents give, each has their own.
The requirements to keep the relief
For gifts, the 99% is not automatic. The law requires:
- A public document. The gift is made before a notary, or formalised as a deed within the filing deadline. For property, a deed is compulsory anyway.
- The source of the money. If you give money, you must be able to show where it comes from, and the document must state that source and how it is handed over (for example, a bank transfer).
- Declare everything, on time. The relief applies to what is fully declared in the tax return.
For small amounts there is an exception: if money given between the same people does not exceed €4,000 over three years, a document with a qualified electronic signature is enough, with no notary.
The donor's income tax: the difference almost nobody sees
When a parent gives away a flat, the tax office treats it as a transfer. If it is worth more than when it was bought, the difference is a capital gain the parent pays in their income tax return, even though they have received nothing. In an inheritance that gain simply does not arise.
That is why giving money has hardly any income tax cost, while giving a property or shares that have risen a lot can cost thousands of euros. There are special cases, such as someone over 65 transferring their main home, or a family business, that should be checked before deciding.
The local capital gains tax
When a property changes hands, the town hall charges the plusvalía municipal. On a gift it is paid by the person receiving it, and the law does not allow town halls to give relief on it. On an inheritance, town halls may reduce it by up to 95% for children, parents and spouses, and Valencia applies that 95%. We explain it in the plusvalía municipal on an inheritance.
A worked example
With example figures: a widowed father is the sole owner of a flat in Valencia that he bought in 2005 for €120,000, costs included. Today it is worth €260,000, which matches its reference value. His son is 35.
| If he gives it | If the son inherits it | |
|---|---|---|
| Son's Inheritance and Gift Tax | €233.53 | €233.53, or €7.82 if it was the father's main home |
| Father's income tax on the €140,000 gain | €31,080 | €0 |
| Local capital gains tax | Paid in full by the son | With the 95% relief |
Inheritance and Gift Tax is the same, but giving costs the father about €31,000 in income tax and the son the full local capital gains tax. The figures exclude notary and land registry costs and assume the father has no other gains that year.
When giving during your lifetime usually makes sense
- For money: there is no income tax gain and, with a deed and a documented source, the relief leaves almost nothing to pay.
- For assets that have barely risen in value since they were bought.
- To help at a specific moment, such as a deposit on a home or starting a business.
- To share things out while you are alive and leave matters clear between siblings.
When it usually makes sense to wait for the inheritance
- For properties that have risen a lot, because of income tax and the local capital gains tax.
- For the main home, which has its own 95% allowance on inheritance.
- When you want to keep control of your assets during your lifetime.
What to bear in mind before signing
- Gifts add up. Gifts from the same donor to the same recipient within three years count as one for working out the tax rate.
- They count in the inheritance. What was given to one child is taken into account later when the estate is shared among siblings and when calculating the forced share. We cover it in the forced share and forced heirs.
- A gift cannot be undone at will. It can only be revoked in cases set out by law.
- Keeping the usufruct (giving the flat and continuing to live in it) is possible, but it has its own calculation and is best done with the figures in front of you.
It is rarely right to do everything by gift or everything by inheritance. The usual answer is to combine the two and decide asset by asset.
If you are at that point, at Equus Capital we look at it with you, with your own figures, and if an inheritance is what is needed, we handle it from start to finish: inheritance services in Valencia.
Frequently asked questions
How much does a child pay if their father gives them a flat in the Valencia region?
Very little in Inheritance and Gift Tax: after the €100,000 allowance a 99% relief applies. In the example of a €260,000 flat, it comes to €233.53. What weighs most is the father's income tax on the gain and the local capital gains tax, which the child pays.
Do you need a notary to give money to a child?
To get the 99% relief, yes: a public document is needed, stating the source of the money and how it is handed over. For €4,000 or less over three years between the same people, a document with a qualified electronic signature is enough.
Who pays the local capital gains tax on a gift?
The person receiving the property pays it, with no relief: the law only allows town halls to reduce it on inheritances.
Does a parent who gives away a flat pay income tax?
Yes, if the flat is worth more than when it was bought: the difference is a capital gain in their income tax return. In an inheritance that gain does not arise.
Does a gift count later in the inheritance?
Yes. What was given is taken into account when the estate is shared among the heirs and for the forced share, unless otherwise provided within what the law allows.
How much do siblings or nephews pay in 2026?
Since 1 June 2026 they get a 25% relief on inheritances and gifts, rising to 50% from 1 June 2027. Only for blood relatives, not in-laws.
What is the deadline to file the tax?
For a gift, 30 working days from signing. For an inheritance, 6 months from the death.
This content is for information only and is not binding tax advice. Inheritance and Gift Tax and income tax rules change often; have your case reviewed by a professional.