The Inheritance of Houses is Rocketing and Sales are Sinking: Why?

April 14, 2012

The sale of homes in Spain is falling, but donations and inheritances are at their peak. Opposite the year-to-year fall of 29.1% sales that was registered in the two first months of the year, inheritances and donations of homes have increased by 8.7%.

From January 2012 to February 2012, sales have plummeted to 63,832 units, compared with 89,981 during the same period in 2011.

On the contrary, the 27,362 homes transferred in the form of inheritances and donations in the two first months of 2012 suppose superior growth to the 2,000 units in the last year and they mark a maximum since the start of the series in 2007.

Transfers of Homes represent 21.3%

The total transfers of homes through inheritance and donation has not stopped increasing and they have already entailed 21.3% of the total transfers in the two first months of 2012.

This implies that in relation to 2007, when the series started, inheritances and donations of homes have practically doubled their weight in the whole of home transfers.

The main reasons

It’s difficult to attribute this boom of inheritances and donations of homes to one factor, although one can point out various motives.

In the first place, it’s worth remembering that in the last various years the “Comunidades Autónomas” (Autonomous Regions) have reduced, or even eliminated, the tax of successions and donations, which involved a reduction of the fiscal charge associated with this type of transfer.

On the other hand, the strong fall experienced by the price of the home can also be acting as an incentive for this type of operation, by reducing the value of the property transfer and the hereditary gain associated with the operation. One has to remember that if the donor is less than 65 years of age, the donation generates a hereditary gain as a difference between the value of acquisition and the value of the transfer, which pays taxes for the purposes of the IRPF.

However, without a doubt, the economic crisis is the main drive behind donations and inheritances of homes. When faced with the difficulties of their children in obtaining a home and becoming independent, parents are coming to the rescue, giving them a piece of real estate from their property. More and more, young people are facing huge difficulties in gaining a home, in a scene of job scarcity and a strong hardening of financial conditions.

Article extracted from Invertia

Other articles of interest:

Homes Sales in February 2012

10 facts about the Spanish property market in 2012 !

New PM To Reduce Tax Pressures For Property Buyers

Can Property Prices Drop by 75% because of Ageing?