Elimination of Inheritance and Donation Tax, and Other Tax Benefits in the Balearics

At Illeslex Abogados, as a law firm in Mallorca, we have closely followed the tax reform carried out by the new Balearic government, which has approved the Tax Reform Legal Decree to remove the Inheritance and Donation Tax between parents and children, grandparents and grandchildren, and between married couples, as well as a reduction of almost 50% between siblings and between an aunt or uncle and their nieces and nephews.

This Legal Decree also anticipates the elimination of Transfer Tax (Impuesto de Transmisiones Patrimoniales) for the purchase of a first permanent residence for people under 30 years of age and people with disabilities, always with the limit of €52,800 in an individual’s income tax return (IRPF), €84,480 in a joint tax return (IRPF) and with a limit of the price of the property, which cannot exceed €270,151.20.

This reform applies to both inheritance from the cause of death as much as inheritance by virtue of the so-called succession agreements or living inheritances under civil law in the Balearics.

In short, this is a beneficial opportunity on a tax level for those who want to donate their assets in favour of their children, which in itself was already beneficial with the figure of the “Definitio” with the payment of 1%, and exemption, with respect to capital gains on income, which is now 0%.

Moreover, the Transfer Tax (ITP) has been reduced by 50% for the purchase of a first house for young people under the ages of 35, and for the purchase of a permanent residence for large families, single-parent families, and dependent families with disabilities, always as long as the price of the property does not exceed €270,151.20. In the case of a large family, the price limit on the property is raised to a maximum of €350,000.

In the case that you would like to carry out one of the procedures in this article, and require assistance with legal or tax matters, we would be delighted to be able give you assistance from our firm, Illeslex Abogados.

Illeslex Abogados

Feliu Martorell Brotad

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