ARiadni Real Estate Blog

The purchase of a first home with parental donation is tax-free

21 July, 2020

Provisions of the tax bill submitted to the Parliament form a golden opportunity for the purchase of a first home with a "dowry" from the family.

Zero tax is provided for financial donations from parents to their children for the purchase of a first home for amounts up to 150,000 euros and staggered rates from 1% to 10% for larger amounts when the current financial donations from parents to their children are taxed at a rate of 10 % and even from the first euro.
The profit is huge. In such a donation of 150,000 euros today the corresponding tax is 15,000 euros while after the voting of the provisions it will be zero. And in the next step, however, for donations of money up to 300,000 euros, the tax is relatively minimal. From 30,000 euros it falls to 1,500 as for the part of the donation from 150,000 to 300,000 euros a tax is imposed with a rate of 1%.
This move by the Ministry of Finance is a golden opportunity for the real estate market, which is also being tested by the effects of the pandemic. The only condition is the proof of the purchase of the first home by the children while the parents will have to justify the legal origin of the money.
According to the new data, the donation of money from parents to children will be taxed based on the scale of parental benefit, which provides a tax-free limit of 150,000 euros. Today, the parental benefit is taxed independently at a rate of 10% from the first euro.

The provisions submitted to the Parliament stipulate that:

1. For the calculation of the tax on monetary donations and parental benefits, recommended by parents to their children for the purchase of a first home, the scale of the Tax Code of inheritance, donations and parental benefits is applied, which provides a tax-free limit of 150,000 euros. For amounts over 150,000 and up to 300,000 euros, a tax of 1% is imposed, for amounts over 150,000 and up to 600,000 euros, a tax rate of 5% is applied, while for the part of money that exceeds 600,000 euros, a tax with a rate of 10% is imposed.
2. A condition for the favorable treatment of donations and parental benefits is that it appears that the donation or parental benefit is made for the acquisition of real estate for which the children were exempted from first residence.
3. The abolition of independent taxation at a rate of 10% concerns only the parental benefits for the acquisition of the first home by the children and not for the acquisition of other assets e.g. car purchase.
4. The presumption of acquisition of the amount given as a benefit of the parent to the child is retained and should be justified by the income of the parent.

With these data, for the parental benefit of 80,000 euros for the purchase of a first home, the tax is zeroed against 8,000 euros today, as well as in any amount up to 150,000 euros (with the current tax of 15,000 euros). At 200,000 euros the tax is set at 500 euros as the first 150,000 euros are tax-free compared to 20,000 euros today.

Elena Laskari
e.laskari@euro2day.gr

euro2day.gr