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Give Donation without having Problem

Author: Patrice Pat
by Patrice Pat
Posted: Jun 02, 2017

As well, we will see then How to formalize loans between private individuals not to have the problems that the monarchy is now having with finance.

Obviously, if it's a loan there is obligation to return the money, as opposed to in a donation. The difference, from the fiscal point of view, is also very important, since simply formalize a loan should not pay any tax neither lender nor borrower, while a donation is subject to the tax of donations which can be very high (progressive that it can reach 34% for donations among relatives and doubled for donations between strangers rate), but the truth is that there are autonomous communities which in recent years have been much reduced tax payable on donations between relatives.

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What comes to establish the law of personal income tax (article 6.5) in relation to loans between individuals is a presumption that they are paid, but should be proof to the contrary. In fact, loans between family members typically agree that they are free, or very low interests. And not because they are free you can finance automatically consider that you it's a donation, as it clarifies the General direction tributes in the V1705-12 binding consultation on 5/9/2012 on a loan of €1,000,000 without interest and repay in 20 years: "in any case, Although it had been planned the total absence of interest, the mere fact of the existence of a family relationship between the parties does not imply no more the existence of a disguised donation When comes before the Management Office, in the terms before exposed, and credited the return, in terms which provide for the public deed, the borrowed amount" "

In these cases the legislation is not as rigorously as the of the tax imposed by the computation of interest at market prices on loans between a society and its partners or administrators (or relatives of these).

TO AVOID TAX PROBLEMS, IT IS VERY IMPORTANT THAT THESE LOANS ARE WELL DOCUMENTED AND, OF COURSE, ARE REAL AND NOT SIMULATED

So for example, parents who provide 150,000 Euros to a son so this buy or reform its housing, should document such operation formalizing a loan document well in public deed or private document. In both cases, and especially if it is formalized in private document, that document should occur before the corresponding Treasury autonomic autoliquidando conveyances and documented legal acts tax but without paying anything, since it is a free operation (article 45.I.B.15 Royal Legislative Decree 1/993, law ITP and stamp duty). That way, with the seal of the regional finance, the private document will have, at least, a reliable, with effects against any other tax administration or third date.

In writing or in the private loan (finance undergone) document is pactarían interests or the gratuitousness of the loan, as well as the form and term of return, depending on the age of the lender and the borrower's ability to return the borrower according to their incomes, etc. It would also be very convenient to the delivery of the borrowed money as well as depreciation of the same (and, where appropriate, payment of interest), are very clear through movement or bank transfers.

On the other hand, it is also important as a means of proof that persons forced to submit Declaration for the tax on the heritage (restored in Spain in principle only for 2011 and 2012, extended to 2013 and will surely continue in 2014) reflect the loan in such a declaration, the borrower like debt and the lender as a right of credit declaring the balance at 31 December of each year, which logically will be reduced on the basis of depreciation.

Doing it properly you can avoid many problems:

-The son always can justify to the tax authorities the origin of the money, and avoid the regional Treasury consider it was a donation, or consider the State Treasury that it has had an unjustified increase of heritage. Moreover, if that loan has served the son for the purchase of your primary residence, for the money that go by returning their parents can practice deduction on your income tax return. For acquisitions after 1 January 2013 removed deduction for purchase of residence in income tax, but a person who purchased your home before that date with a bank loan might cancel it with the loan of a family member or friend and would be entitled to deduct for income tax returns that go making that particular loan in the following years.

-Parents can always justify before the Treasury the money they are getting from the son, either gradually or by blow after several years, is not more than the return of a loan, and are not therefore revenues or donations that have to pay taxes.

-In addition, documenting properly these loans to family members or friends, as well as their returns, will always be easier its claim in the event of non-payment, and accreditation, when for example a few parents have lent money to the son and to the spouse or common-law partner this, and then there are problems between them. Of course, for these purposes, always can be documented these loans between individuals by public deed, even with mortgage. Interestingly, in these cases (mortgage loan between individuals) not is paid no tax for the incorporation of the mortgage. On the contrary, to formalise a mortgage granted by a bank must be paid a tax stamp which can be approximately between 1.5% and 2% approximately.

However, we have tried to explain how it should be implemented a loan between private individuals to avoid problems with finance. In any case the most important non-forms but the background and the key to prove that it is in fact a loan and not a disguised donation is credited that amount lent will be returning... and also that does not appear any document of the son-in-law of the lender, describing it as a "donation"... as it has happened to the King.

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Author: Patrice Pat

Patrice Pat

Member since: May 30, 2017
Published articles: 1

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