Donate instead of bequeathing – use the usufruct calculator and save tax money with early donations – here’s how it works

Donation instead of inheritance: What tax law provides

Anyone who passes on assets during their lifetime must expect a gift tax – for tax purposes, this process is treated the same as an inheritance (Section 7 Paragraph 1 ErbStG). The tax liability applies exclusively to the recipient (Section 1 Paragraph 1 No. 2 in conjunction with Section 10 ErbStG). A decisive advantage: The allowances – e.g. B. 400,000 euros for children or 500,000 euros for spouses – can be exhausted every ten years (Section 16 ErbStG). It is therefore advisable to give early and in stages.

Usufruct: Tax advantage through usage rights

With usufruct, the right of use – such as living in or renting out a property – remains with the donor, while ownership is already transferred to the recipient (§ 1030 BGB). This construction has a decisive tax advantage: the value of the usufruct is deducted from the transferred asset when calculating the gift tax (Section 10 Paragraph 1 Sentence 2 ErbStG).

This reduces the taxable amount significantly. For example, if a property worth 600,000 euros is handed over with lifelong usufruct and this has a capital value of 200,000 euros, only the remaining balance – i.e. 400,000 euros – is relevant for tax purposes. In many cases, the personal allowance is sufficient to make the transfer completely tax-free. This makes usufruct a central component of a tax-optimized transfer of assets.

This is how the value of the usufruct is calculated

In order to determine the tax advantage of the usufruct, the tax office calculates the so-called capital value – i.e. the total value of the right of use over the expected lifespan of the beneficiary (Section 14 BewG).

The basis for this is the annual value, which results from approximately 12 × monthly rent (§ 15 BewG). Alternatively, if the value is high, the market value of the property is divided by 18.6 (Section 16 BewG). This annual value is then multiplied by a multiplier from Appendix 9a. This is based on age and gender and is based on the official mortality tables.

Use usufruct calculator – simple and tax wise

Anyone who wants to calculate the tax effect of a usufruct in advance can use digital tools. The usufruct calculator from the German Institute for Retirement Provision quickly provides a reliable assessment of the capital value – without any complicated calculation methods. Only a few details are required such as age, gender, family relationship and asset value. The tool uses this to calculate the tax-relevant usufruct value.

This makes it possible to check in advance whether the usufruct will cause the value of the gift to fall below the tax-free amount – thus making a tax-free transfer possible.

Editorial team finanzen.net