What property owners should be careful about to avoid new charges – Parental benefits up to 150,000 euros for the acquisition of a first home or the repayment of mortgage installments are tax-free
The reversals in the map of the objective values of real estate prepared by the Ministry of Finance have mobilized taxpayers who plan to proceed either with the parental provision or donation of real estate to their children or grandchildren or the acquisition of a first home. In areas where zone prices will go uphill, purchases, parental benefits, real estate donations will cost more. Even in cases where transfers are tax-free, the increase in fair values will “inflate” the notarial and transfer costs borne by taxpayers. Thus, before the implementation of the new objective values of real estate, taxpayers seek solutions in order to avoid charges. On the front line are parental benefits and first home donations.
Notaries recommend to parents the transfer of real estate to their children especially if it is a first home since in most cases the parental benefits are tax free. However, the donation of a house that is passed from grandparents to grandchildren is also tax-free.
Of course, experts advice those who are going to acquire real estate with parental benefit or donation to be very careful and to take care before the transfer to take a look at the ENFIA account that accompanies the property.
Parental benefits of a first home worth up to 200,000 euros can be made without tax, while in any case of obtaining a first home with parental benefit or donation from a married taxpayer, a tax-free limit of 250,000 euros applies, which is further increased if there are protected children. If the value of the first home exceeds the above limits, tax is levied only on the excess amount of value.
Tax rates and tax-free amounts
|Parental benefir Tax
|Total property value
150 000 €
|150 000 €
150 000 €
|1 500 €
|300 000 €
1 500 €
300 000 €
|15 000 €
|600 000 €
16 500 €
The same tax rate applies to parents providing funds to buy the first home.
Tax-free parental benefit amounts for first place of residence
|200 000 €
|In marriage or cohabitation
250 000 €
The tax-free amount is increased by EUR 15,000 for each of the first two children of the taxpayer and by EUR 30,000 for the third and each of the following children.
However, the tax benefits of up to 150,000 euros for parents who want to help their children to get a first home are now tax-free. In fact, this measure also applies to the money that parents will give to their children to repay installments of a first home mortgage.
With the new provision, the tax burden for donating amounts of money up to 150,000 euros from parents to children for the purchase of a first home is zero, while for higher amounts, gradual rates from 1% to 10% are provided. Beware, however, sums of money provided by the parents to the children for the construction of a building on a plot of land (whether the child has been exempted from the first residence for the acquisition of the plot or not) are taxed independently at a rate of 10% from the first euro. On the contrary, the amounts up to 150,000 euros that parents will give to their children for the repayment of loan installments granted for the purchase of a first home are tax-free.
The parental benefit tax, ie the tax on the donation made from a parent to a child, as well as the tax on a donation from a grandparent to a grandchild is calculated in stages. The first 150,000 euros of the value of the transferred asset are tax-free; the next 150,000 euros are taxed at 1% and the next 300,000 euros at 5%.
Therefore, a total value of 300,000 euros corresponds to a tax of 1,500 euros, while a total value of 600,000 euros corresponds to a tax of 16,500 euros. If the value exceeds 600,000 euros, then the part of the value in excess of the amount of 600,000 euros is taxed at 10%.
Tax-free limits for first residence
If the first home is obtained from a single person with a donation or parental benefit, the value of the home is exempt from tax up to the amount of 200,000 euros. In case of acquiring a first home by a married person, the value is exempt from tax up to the amount of 250,000 euros. The tax-free limit is increased by 25,000 euros for each of the first two children and by 30,000 euros for the third and each of the subsequent minor children, who are cared for by the beneficiary. The amount of the exemption includes the value of a car parking space and a storage space, for an area of each up to 20 sq.m., if they are on the same property and are acquired at the same time.
Also, in case of donation or parental provision of a plot of land on which a first residence can be built, a tax exemption is provided up to the value limit of 50,000 euros for the unmarried and up to the limit of 100,000 euros for the married. The limit is increased by 10,000 euros for each of the first two children and by 15,000 euros for the third and each of the beneficiary’s subsequent children. The above applies if the beneficiary receives only one house or a plot of land in full ownership and not an indivisible percentage.