Giving a home or money to your children in the Canaries: the 99.9 % gift-tax rebate, the income tax it does not cancel, and when waiting to inherit costs less

A couple who retired to Adeje, 68 and 66, own a second flat in Los Cristianos that they bought in 2004 for €150,000 and that the Catastro now values at €320,000. Their daughter lives in Manchester. The question they bring to our Costa Adeje office is the one every parent on the island eventually asks: is it better to give her the flat now, or to let her inherit it? The honest answer is that the Canary Islands have made the gift tax almost disappear for children, that the bill hides in a different tax, and that the answer changes completely for money, for a nephew, and for a home the parents still live in. This piece reads the texts — the Canary consolidated tax code, the inheritance and gift tax act and its regulation, the income tax act, the local finance act and the Civil Code — and then works the couple's numbers. Quotations are in Spanish with the reading in English.

Two taxes on a gift, and who pays each

The inheritance and gift tax act taxes La adquisición de bienes y derechos por donación o cualquier otro negocio jurídico a título gratuito, «intervivos» — the acquisition of assets and rights by gift or any other gratuitous transaction between the living (article 3.1.b) — and puts the bill on the person who receives: En las donaciones y demás transmisiones lucrativas «inter vivos» equiparables, el donatario o el favorecido por ellas — in gifts and equivalent gratuitous transfers, the donee or the person favoured by them (article 5.b). The tax accrues el día en que se cause o celebre el acto o contrato — on the day the act or contract is made (article 24.2), and for a property the taxable value is fixed by the law itself: En el caso de los bienes inmuebles, su valor será el valor de referencia previsto en la normativa reguladora del catastro inmobiliario, a la fecha de devengo del impuesto — for real estate the value is the reference value of the Catastro on the accrual date (article 9.3), or the declared value if higher.

That is the tax the daughter pays. The second tax is the one the parents pay and most families do not see coming. Under the income tax act a gift is a transfer like a sale: Son ganancias y pérdidas patrimoniales las variaciones en el valor del patrimonio del contribuyente que se pongan de manifiesto con ocasión de cualquier alteración en la composición de aquél — capital gains and losses are the changes in the taxpayer's wealth revealed by any alteration in its composition (article 33.1) — and the gain is measured En el supuesto de transmisión onerosa o lucrativa, la diferencia entre los valores de adquisición y transmisión de los elementos patrimoniales — in an onerous or gratuitous transfer, as the difference between the acquisition and transfer values (article 34.1.a), the transfer value of a gift being the one que resulten de la aplicación de las normas del Impuesto sobre Sucesiones y Donaciones, sin que puedan exceder del valor de mercado — that results from the rules of the inheritance and gift tax, capped at market value (article 36). A third, municipal, tax applies to the land, and it too falls on the donee. What does not apply is stamp duty: the variable quota of the documented legal acts tax reaches only deeds no sujetos al Impuesto sobre Sucesiones y Donaciones — not subject to the inheritance and gift tax (article 31.2 of the transfer tax act), and a gift deed is.

The Canary rebate on gifts: 99.9 %, groups I and II, and only in a public deed

The Canary consolidated text of ceded taxes, Decreto Legislativo 1/2009, carries the rule in its article 26 sexies, as worded by the Decreto-ley 5/2023 of 4 September 2023: Los sujetos pasivos incluidos en los grupos I y II de los previstos en el artículo 20.2.a) de la Ley 29/1987, de 18 de diciembre, del Impuesto sobre Sucesiones y Donaciones, aplicarán una bonificación del 99,9 por 100 de la cuota tributaria derivada de las adquisiciones “inter vivos”, siempre que la donación se formalice en documento público — taxpayers in groups I and II of the state act apply a rebate of 99.9 % of the tax due on acquisitions between the living, provided the gift is formalised in a public document. Group I is descendants under twenty-one; group II is descendants of twenty-one or more, spouses and ascendants (article 20.2.a of the state act). Siblings, nephews, nieces and in-laws are group III, and for gifts they get nothing: the 99.9 % of article 26 sexies stops at group II.

Two more sentences of the same article matter. The public document is not needed cuando se trate de contratos de seguros que deban tributar como donación — for insurance contracts taxed as gifts — and, to stop assets being passed down a chain, Esta bonificación no será aplicable a aquellas adquisiciones “inter vivos” que en los tres años anteriores se hayan beneficiado de la bonificación prevista en este artículo, salvo que, en dicho plazo, se produzca su adquisición “mortis causa” — the rebate does not apply to acquisitions between the living which in the previous three years already enjoyed it, unless an inheritance intervened. A flat given by grandparents to a parent in 2025 cannot be re-gifted to the grandchild with the rebate before 2028.

What the rebate is applied to is the quota of the state scale, because the Canary text approves no scale of its own for this tax and the state act then applies los tipos que se indican en la siguiente escala — the rates of the following scale (article 21.2) — from 7.65 % on the first €7,993.46 to 34 % above €797,555.08, multiplied by the coefficient of article 22.2, which is 1.0000 for groups I and II when the donee's pre-existing wealth does not exceed €402,678.11 and 1.5882 for group III. For a gift of real estate to a child the Canary text offers no reduction of the taxable base, so the arithmetic is the reference value, the state scale, the coefficient and then the 99.9 %. For money it does offer one, narrow and useful: the taxable base of a cash gift realizada por un ascendiente en favor de sus descendientes o adoptados menores de 35 años — made by an ascendant to descendants under thirty-five — con el límite de 24.040 euros, se reducirá en un 85 por ciento — is reduced by 85 % up to €24,040 — when the money buys or renovates the donee's first habitual residence within six months, the home is kept five years, and the deed states the purpose (article 26 ter). Beside it sits the state rule that adds up gifts: Las donaciones y demás transmisiones «inter vivos» equiparables que se otorguen por un mismo donante a un mismo donatario — gifts and equivalent transfers between the living by the same donor to the same donee — todas ellas dentro del plazo de tres años, a contar desde la fecha de cada una, se considerarán como una sola transmisión — all within three years counted from each one, are treated as a single transfer (article 30.1), and gifts within four years of the donor's death are added to the inheritance for the rate (article 30.2).

What the same rebate does at death, and why the group matters

For inheritances the Canary rule is one step wider. Article 24 ter, in the same 2023 wording: Los sujetos pasivos incluidos en los grupos I, II y III de los previstos en el artículo 20.2.a) de la Ley 29/1987, de 18 de diciembre, del Impuesto sobre Sucesiones y Donaciones, aplicarán una bonificación del 99,9 por 100 de la cuota tributaria derivada de las adquisiciones mortis causa — taxpayers in groups I, II and III of the state act apply a 99.9 % rebate on the tax due on acquisitions on death. A nephew who inherits pays a tenth of a percent; a nephew who receives a gift pays the whole scale with the 1.5882 coefficient. Before the rebate the inheritance also enjoys the kinship reductions of article 20 — Hijos o adoptados: 23.125 euros — children, €23,125 — and, where the home was the deceased's own, article 22 ter's reducción del 99 por ciento del valor de tal vivienda, con un límite de 200.000 euros — a 99 % reduction of its value up to €200,000, conditional on keeping it five years. For a child, then, the inheritance tax on a Canary flat is a few tens of euros whether it comes by gift or by death; the difference between the two routes is not in this tax at all. Our guide to inheritance in the Canaries covers the succession side; here we follow the gift.

The tax the rebate does not cancel: the parents' income tax

The income tax act erases the gain on death and nowhere else. Among the cases where no gain exists it lists Con ocasión de transmisiones lucrativas por causa de muerte del contribuyente — transfers on the taxpayer's death (article 33.3.b) — the rule Spanish practice calls the «plusvalía del muerto»; gifts between the living are not on that list, so the parents who give the Los Cristianos flat are taxed on the difference between what it cost them and its reference value on the day of the deed, at the savings scale, which since 1 January 2025 runs at 19 % to €6,000, 21 % to €50,000, 23 % to €200,000, 27 % to €300,000 and 30 % above, adding the state and regional halves of articles 66 and 76. A gift that shows a loss gives nothing back: the act refuses to compute Las debidas a transmisiones lucrativas por actos ínter vivos o a liberalidades — losses due to gratuitous transfers between the living or to gifts (article 33.5.c).

Two exemptions are written for other situations and reach some gifts. The gain is exempt Con ocasión de la transmisión de su vivienda habitual por mayores de 65 años o por personas en situación de dependencia severa o de gran dependencia — on the transfer of the habitual residence by people over sixty-five or in severe or great dependency (article 33.4.b) — and the article speaks of a transfer without distinguishing a sale from a gift; parents over sixty-five giving the home they live in are in a different position from parents giving a second flat, and we check that reading against the tax authority's practice before the deed. And a gift of a family business or its shares that qualifies for the state reduction of article 20.6 of the inheritance act shows no gain either (article 33.3.c). A non-resident parent who gives a Canary property pays the same gain under the non-resident income tax instead. Whoever pays it, the daughter starts afresh: her acquisition value for a future sale is the value taxed in the gift (article 36), which is why the day she sells, the non-resident seller's 3 % retention and its refund will be computed from €320,000 and not from her parents' 2004 price.

The municipal tax, the notary and the registry

The tax on the increase in value of urban land — the «plusvalía municipal» — is charged a consecuencia de la transmisión de la propiedad de los terrenos por cualquier título — on the transfer of the land by any title (article 104.1 of the local finance act) — and in a gift the taxpayer is the one who receives: En las transmisiones de terrenos o en la constitución o transmisión de derechos reales de goce limitativos del dominio a título lucrativo, la persona física o jurídica — in gratuitous transfers of land or of rights over it, the person — que adquiera el terreno o a cuyo favor se constituya o transmita el derecho real de que se trate — who acquires the land or in whose favour the right is created or transferred (article 106.1.a). It accrues on the date of the transfer (article 109.1.a) and the declaration is due, Cuando se trate de actos ínter vivos, el plazo será de treinta días hábiles — for acts between the living, within thirty working days (article 110.2.a), against six months for a death. The base is the cadastral value of the land multiplied by a coefficient set by the town hall within the legal maximum for the years of ownership, which tops at 0.40 from twenty years; the December 2025 decree that updated those maximums for 2026 was voided by the Congress on 27 January 2026, so the previous table stands. The rate is the town hall's, sin que dicho tipo pueda exceder del 30 por ciento — which may not exceed 30 % (article 108.1). And where there has been no real increase, the transfer is not taxed at all: No se producirá la sujeción al impuesto en las transmisiones de terrenos respecto de los cuales se constate la inexistencia de incremento de valor — article 104.5, with the gift's declared value counting as the transfer value. The notary and the land registry charge their tariffs on the value of the gift; stamp duty, as said above, does not apply.

Which office, which rules and which deadline when the child lives abroad

The Canary rules do not depend on the daughter living here. The state act's second additional provision, rewritten after the Court of Justice's judgment in case C-127/12, gives non-residents the regional rules by the situation of the asset: En el caso de la adquisición de bienes inmuebles situados en España por donación o cualquier otro negocio jurídico a título gratuito e «inter vivos» los contribuyentes no residentes tendrán derecho a la aplicación de la normativa propia aprobada por la Comunidad Autónoma donde radiquen los referidos bienes inmuebles — for the acquisition of real estate located in Spain by gift or any other gratuitous transaction between the living, non-resident taxpayers are entitled to the rules of the region where the property sits (paragraph 1.c). For money and other movables given to a non-resident, the region is the one donde hayan estado situados los referidos bienes muebles un mayor número de días del período de los cinco años inmediatos anteriores — where the assets sat for most days of the previous five years (paragraph 1.e): money in a Tenerife account given to a son in Berlin follows the Canary rules. The office changes, though. A non-resident donee files with the State's tax agency, on form 651, within the state regulation's treinta días hábiles, a contar desde el siguiente a aquel en que se cause el acto o contrato — thirty working days from the day after the act (article 67.1.b of the regulation) — and the agency's own instructions add that Los sujetos pasivos no residentes deben designar un representante fiscal que tenga su residencia en territorio español — non-resident taxpayers must appoint a fiscal representative resident in Spain.

When the donee lives in Spain the connecting point is different. For real estate the tax belongs to the region where it sits; for money and everything else, to the region donde el donatario tenga su residencia habitual a la fecha del devengo — where the donee habitually resides on the accrual date (article 32.2.b and c of the financing act), residence meaning the region where the donee spent most days of the five years before the gift (article 28.1.1.b). A resident donee files with the Canary tax agency, and the Canary text sets its own clock: En los demás supuestos, en el de un mes, a contar desde el momento en que se cause el acto o contrato — in all other cases, one month from the act (article 27.1.b, in the wording in force since 1 January 2025). A gift of money from parents in Hamburg to a daughter who has lived in Adeje for six years is therefore a Canary gift, filed in Santa Cruz within a month, with the 99.9 % if it passed through a notary.

A worked example from Los Cristianos

Take the couple's flat: reference value €320,000, acquisition cost €162,000 including the 2004 purchase costs, held half each, the daughter a non-resident in group II with modest wealth of her own. If they give it now, the daughter's gift tax is computed on €320,000: the state scale gives €60,566.81 and the coefficient leaves it there; the 99.9 % rebate reduces it to €60.57, provided the gift is in a public deed, which for real estate the Civil Code requires anyway. The parents' income tax is where the money goes: each declares a gain of €79,000, taxed at 19 % to €6,000, 21 % to €50,000 and 23 % on the rest, €17,050 each, €34,100 for the two of them, payable in the return of the year of the deed. The plusvalía municipal falls on the daughter: with a cadastral land value of, say, €60,000 and twenty-two years since 2004, the base is €24,000 and the tax at the legal maximum of 30 % would be €7,200; Arona's own rate and coefficients decide the real figure, and the real-increase route of article 104.5 caps it where the land has gained less. Notary and registry add their tariffs.

If instead the daughter inherits the same flat, her inheritance tax starts from €320,000 less the €23,125 reduction for a child, €54,669.93 on the scale, €54.67 after the 99.9 %; the parents' gain disappears under article 33.3.b; the plusvalía municipal is the same tax on the same land, declared within six months, and the town hall may rebate up to 95 % of it for descendants if its ordinance says so (article 108.4); and the daughter's future acquisition value is the value declared at the death, higher still if the flat keeps rising. On these numbers the gift costs the family about €34,100 more than waiting, and buys three things: the certainty of who gets the flat, the daughter's use of it from today, and the removal of the flat from any later claim, dispute or need of the parents themselves.

When a gift wins

The arithmetic turns the other way in five situations we see every month. Money first: cash has no acquisition cost, so a gift of money creates no gain for the parents, and with the deed the tax is symbolic — €100,000 to a daughter in group II is €12,415.35 on the scale and €12.42 after the rebate. The same €100,000 sent by bank transfer, with no notary, is taxed in full, because article 26 sexies gives the rebate siempre que la donación se formalice en documento público; the deed costs a few hundred euros and saves twelve thousand. Second, a property that has barely gained: a flat bought in 2022, or one the parents themselves inherited recently at a high value, produces a small gain, and the gift's only real cost is the municipal tax and the fees. Third, the home the parents live in, when both are over sixty-five, under the reading of article 33.4.b above. Fourth, the child who needs a home now: the €24,040 reduction of article 26 ter is small, but a gift of money for the first home, deeded with the purpose stated, is the cheapest transfer the Canary code offers. Fifth, the parents who want to give and keep: a deed that gives the bare ownership and reserves the life usufruct leaves the parents living in or renting the flat until they die, and the gift tax is computed on the bare ownership alone. The state act puts a life usufruct's value igual al 70 por 100 del valor total de los bienes cuando el usufructuario cuente menos de veinte años, minorando a medida que aumenta la edad, en la proporción de un 1 por 100 menos por cada año más con el límite mínimo del 10 por 100 del valor total — equal to 70 % of the value when the usufructuary is under twenty, one point less for each year of age, with a floor of 10 % (article 26.a): at sixty-eight the usufruct is 21 %, the bare ownership 79 %, and the daughter's tax on €252,800 is €43.43 after the rebate. When the usufruct ends, the tax on that part is charged según el título de constitución — under the title that created it (article 26.c), the gift.

And one situation where waiting always wins: a gift to a brother, a sister, a nephew or a niece. Group III has no rebate on gifts, so €100,000 to a nephew costs €19,718.07 by gift, the scale times 1.5882, against €17.33 by inheritance after the €9,300 reduction of article 20.c and the 99.9 % of article 24 ter. For them the will, not the deed, is the instrument.

The civil side: forced heirs, clawback and the deed itself

A gift is un acto de liberalidad por el cual una persona dispone gratuitamente de una cosa en favor de otra, que la acepta — an act of liberality by which a person disposes gratuitously of a thing in favour of another, who accepts it (article 618 of the Civil Code), and the acceptance is not a formality: La donación no obliga al donante, ni produce efecto, sino desde la aceptación — the gift binds the donor and takes effect only from acceptance (article 629). For real estate the form is fixed: Para que sea válida la donación de cosa inmueble, ha de hacerse en escritura pública, expresándose en ella individualmente los bienes donados y el valor de las cargas que deba satisfacer el donatario — to be valid, a gift of real estate must be made in a public deed identifying each asset and the value of any charges the donee must bear — and La aceptación podrá hacerse en la misma escritura de donación o en otra separada; pero no surtirá efecto si no se hiciese en vida del donante — the acceptance may be in the same deed or a separate one, but has no effect unless made in the donor's lifetime (article 633). A daughter in Manchester accepts through a power of attorney or in a second deed notified to the parents. For money the Code allows writing without a notary — La donación de cosa mueble podrá hacerse verbalmente o por escrito — a gift of a movable may be made orally or in writing (article 632) — which is why so many transfers between parents and children are valid gifts that never reached a notary and never earned the rebate.

The Code protects the donor twice. The donor may reserve la facultad de disponer de algunos de los bienes donados, o de alguna cantidad con cargo a ellos — the power to dispose of some of the assets given or of a sum charged on them (article 639) — and may stipulate a reversion in the donor's own favour para cualquier caso y circunstancias — for any case and circumstances (article 641), so that a flat given to a daughter returns to the parents if she dies before them. A gift is revocable for ingratitude, among other cases Si le niega indebidamente los alimentos — if the donee wrongly denies the donor maintenance (article 648.3), and, only for a donor who had no children when giving, by the later birth of one (article 644). Nobody may give away más de lo que pueda dar o recibir por testamento — more than could be given or received by will — and La donación será inoficiosa en todo lo que exceda de esta medida — the gift is inofficious in all that exceeds that measure (article 636); the reduction is worked out at the donor's death, on el valor líquido de los bienes del donante al tiempo de su muerte — the net value of the donor's assets at death (article 654) — may be asked only by those entitled to a forced share (article 655), and hits the most recent gifts first (article 656). Between children, gifts count against the share: Las donaciones hechas a los hijos, que no tengan el concepto de mejoras, se imputarán en su legítima — gifts to children not made as a betterment are charged to their forced share (article 819) — and a forced heir who shares the estate with others deberá traer a la masa hereditaria los bienes o valores que hubiese recibido del causante de la herencia, en vida de éste — must bring into the estate what they received from the deceased in life (article 1035), at su valor al tiempo en que se evalúen los bienes hereditarios — its value when the estate is valued (article 1045), unless the parents dispensed with collation in the deed (article 1036).

Whether those Spanish rules govern at all depends on the law of the succession. Under the European Succession Regulation Cualquier persona podrá designar la ley del Estado cuya nacionalidad posea en el momento de realizar la elección o en el momento del fallecimiento — anyone may choose the law of the state of their nationality at the time of the choice or at death (article 22.1) — and that law then governs, among other things, la obligación de reintegrar o computar las donaciones o liberalidades, adelantos o legados a fin de determinar las cuotas sucesorias de los distintos beneficiarios — the obligation to restore or account for gifts, advances or legacies when determining the shares of the beneficiaries (article 23.2.i). A British or German parent who has chosen their national law in a Spanish will has also chosen the rules under which today's gift will be counted tomorrow; a parent who has not is under Spanish forced-heirship rules, with the collation and reduction above. The gift deed and the will are drafted together or they contradict each other.

Eight things to settle before the deed

1. The two values: the Catastro's reference value on the day, which fixes the daughter's tax, and the parents' acquisition cost with the 2004 purchase costs, which fixes theirs.
2. Whether the parents give full ownership or the bare ownership with the usufruct reserved, and, if so, the usufruct's percentage by their age.
3. The daughter's residence for tax purposes on the day of the deed, which decides the office, the form and the clock: the State's agency and thirty working days, or the Canary agency and one month.
4. A fiscal representative in Spain for a non-resident donee, and a power of attorney if she will not attend the notary.
5. Whether any gift in the last three years to the same child must be accumulated, and whether the flat itself received the rebate in the last three years.
6. The reservation of the power to dispose, the reversion clause and the dispensation from collation, each a line in the deed and each irreversible if omitted.
7. The parents' will, and whether it chooses their national law, so that the gift is counted at their death under the rules they intend.
8. The plusvalía declaration at the town hall within thirty working days, with the acquisition title if the land has not gained.

In the Canaries the gift tax on a child is a few tens of euros and the inheritance tax is the same few tens of euros. The choice between giving now and leaving later is therefore not a choice about that tax. It is a choice about the parents' income tax on the gain, which death erases and a deed triggers; about a nephew, who pays in full by gift and almost nothing by will; and about money, which costs nothing to give and twelve thousand euros to give without a notary.

Our inheritance team at the Costa Adeje office prepares gift deeds for families in the south of Tenerife, computes the three taxes on both routes before anyone signs, files the gift tax with the State's agency or the Canary agency as the case requires, and drafts the will that the gift needs beside it; the consultation is a paid one, quoted in advance. The service is described on our inheritance law page, and the contact page has both offices' hours.

Common questions

Do I still have to file the gift tax if the rebate leaves a few euros to pay?

Yes. The rebate is applied inside a self-assessment on form 651 that must be filed, with the deed attached, within one month at the Canary agency or thirty working days at the State's agency; the 99.9 % reduces the amount, not the duty to declare. A late filing adds surcharges on what is due and invites a check of the deed, and the rebate itself depends on the gift being in a public document, which the filing proves.

We want to send our son €50,000 for a deposit on a flat in Adeje. Is a bank transfer enough?

Legally a transfer with a written record is a valid gift of money under article 632 of the Civil Code, but it is taxed in full: the 99.9 % of article 26 sexies requires a public document. Signed before a notary, the same €50,000 costs your son a few euros of tax, and if he is under thirty-five and the money buys his first habitual residence within six months, article 26 ter reduces the base by 85 % up to €24,040 on top. The transfer follows the deed, not the other way round.

Can we give the flat and keep living in it?

Yes, by giving the bare ownership and reserving the life usufruct in the deed. You keep the use and the rents for life, the gift tax is computed on the bare ownership only — at sixty-eight the usufruct is worth 21 % of the value under article 26 of the state act — and when the usufruct ends the child pays the tax on that part under the gift rules. Your income tax on the gain is still due on the value of what you give.

Our daughter is not resident in Spain. Does she lose the Canary rebate?

No. The state act's second additional provision gives a non-resident donee of a property in the Canaries the Canary rules, and the same for money that sat in a Canary account for most of the last five years. What changes is the office and the clock: she files form 651 with the State's tax agency within thirty working days, through a fiscal representative resident in Spain, and the 99.9 % is applied in that return.

Can our other children challenge the gift after we die?

They can ask for it to be counted, and, if it exceeds what the law lets you give freely, reduced. Under Spanish law a gift to a child is charged to that child's forced share unless the deed says otherwise, and forced heirs may claim the reduction of inofficious gifts at your death, most recent first. If you have chosen your national law in a Spanish will, that law decides whether and how the gift is counted. The deed and the will are drafted together for that reason.

This article is general information as of September 2026, not advice on any particular gift; the texts cited are the Canary consolidated text of ceded taxes (Decreto Legislativo 1/2009) in its wording in force, Ley 29/1987 and its 1991 regulation, the income tax act, the consolidated local finance act, the transfer tax act, the Civil Code and Regulation (EU) 650/2012. Values, scales and municipal coefficients are the ones in force on the day of the deed; a consultation with our inheritance team is a paid service.