How to reduce taxes by helping a person with a disability

A tax benefit for people with disabilities, little-known

In Spain, there is a way help a person with a disability and, at the same time, reduce your tax burden. This is the contributions to assets protected, a mechanism intended for the family members (parents, siblings, guardians, or even friends) may reserve of money or goods in that person's favor, and get tax benefits for it.

From IURIT, we believe that this figure is one of the most humane and useful of the Spanish tax system, but also one of the most unknown. Many families do not know that they can save taxes legally and responsibly, while ensuring the future stability of a loved one with disabilities.

What is a heritage protected?

Imagine a “piggy bank legal” created for a person with a disability. In it, close family members or friends can enter money, stocks, real estate or any property, with the condition that you only use to cover their future needs: housing, medical treatment, care, education, etc

What is important here is that money or since it does not form part of the patrimony of the donorbut that happens to be legally protected. In exchange, the donor may reduce part of their taxable income in the personal income TAX, that is, to pay less taxes this year.

From a legal point of view, this figure has two virtues: it protects the assets of the beneficiary and recognizes fiscally the effort of the contributor. But —as with everything in tax law— not enough to have good intentions: we must do it well, complying with the formalities required by the Treasury department.

Who can benefit?

Almost any person can make a contribution in favor of someone with a disability. It is usual that they do parents or guardiansbut they can also do it other family members or people close.
Yes, the law requires that the beneficiary has the officially recognized disabilityand create a heritage-protected formally (usually by means of a public deed before a notary public).

In IURIT we recommend that before making any contribution will ask for professional advice, because not all of the contributions generated tax reduction. The excess of the permitted limits, or a structure inadequate may cause the Treasury to consider a donation to normal, losing the benefit.

How much can you save?

The savings depends on the amount contributed and the type of contributor. For example, parents who are or will nurture the heritage can reduce a significant part of their taxable income annually. This can be a discount real of several hundreds or even thousands of euros in the statement.

In our experience, when it is well planned, this instrument allows you to optimize your income TAX for the whole familyespecially if the contributions are divided between several states (for example, both parents).

However, if it is done in an informal manner, it can bring problems. We have seen cases in which families have made a direct transfer “to the future of the child” without complying with the legal steps, and Finance have been treated as donations without reduction, with the consequent payment of taxes and penalties.

The thing to keep in mind

Create a heritage protected it is not simply to open a bank account. You must meet certain legal requirements:

• Formalization before a notary public or in a public deed.
• Specific statement of the destination of the funds.
• Compliance limits maximum annual benefit fiscally.
• Tracking the movements of the heritage.

From the point of view of IURIT, this control should not be seen as an obstacle, but as a ensuring transparency. Prevents the funds to be diverted to or arising out family conflicts, and ensures that the Treasury respects the reductions tax applied.

We strongly believe that the heritage-protected are a tool that combines solidarity and tax efficiency. Help plan the future of a vulnerable person without punishing fiscally who makes it possible.

The main problem is that the complexity of law has made many families do not use. That's why our work is to bring these mechanisms to the common citizen: explain in simple words how they work and how you can become a tax planning and family smart.

Do you want to make sure that your contributions will be articulated properly and take advantage of all the tax benefits available?
Please see your case with IURIT and we will help you design a heritage protected tailored to your situation.