Navarra’s consumer association, Irache, is advising families to seek professional counsel before making financial gifts or loans to one another, as such transactions have increased in recent years, driven largely by difficulties in accessing homeownership. Data from the General Council of Notaries in Spain shows a rise in familial donations within the region, from 1,300 in 2020 to 1,529 in 2024.
Many of these donations are intended to help family members cover down payments on properties, as mortgages typically finance around 80% of a home’s cost, leaving buyers needing to secure substantial savings. Irache warns that these transfers of funds can incur unexpected costs, particularly related to gift taxes.
In Navarra, donations between parents and children under €250,000 are subject to a tax rate of 0.8%. The association recommends documenting all donations with a private contract detailing the donor, recipient, amount, and acceptance, and ideally including proof of the bank transfer. A tax return must be filed within two months of the donation to ensure the minimum tax rate is applied.
For those opting for a loan instead of a gift, Irache advises a signed agreement outlining the lender, borrower, loan amount, interest rate (which can be 0%), and repayment terms. A declaration to the tax authorities within two months is also recommended to prevent the loan from being reclassified as a taxable gift.
Irache has also observed an increase in homeowners gifting their properties, often to their children, a practice that has grown 71.2% nationally between 2017, and 2024. These transfers require notarization and reporting to tax authorities to assess applicable inheritance or gift taxes based on the property’s value.
The association cautioned that many families mistakenly believe no formal documentation is needed for transfers between close relatives, a potentially costly oversight. Failure to properly document and report these transactions could lead to tax authorities assigning the income to a more heavily taxed category.
As a potential solution to ease the financial burden on young people seeking homeownership, Irache has proposed the reintroduction of a regulated housing savings account, offering incentives to encourage saving for a future home purchase. The association provides mediation services between consumers and businesses, as well as assistance for those facing eviction.
