Avoid inheritance taxes
Real estate is usually the most valuable asset that a person or family owns when it owns it. There is hardly an object with a total value of less than 100,000 euros, which is why high tax payments have to be made in the event of an inheritance. In many cases, the sums even exceed the financial means of the heirs.
It can therefore often be worthwhile to have the property transferred to any heirs during your lifetime. This saves taxes and possibly also disputes among the heirs. In order to transfer ownership in a legally correct and tax-efficient way, the owners have various options.
Gifts between spouses and partners
There are always tax traps waiting for heirs, which can lead to high additional payments. However, this dilemma can be circumvented if the children or spouse are registered as the owner of the property while the parents or spouse are still alive.
Spouses or legal spouses are allowed to give away a property tax-free to their partner as long as it is used for their own needs. In addition, a further EUR 500,000 can be given tax-free every ten years. It is also possible for spouses to inherit a property tax-free, but in practice this only works if the spouse lives in the house for a further ten years.
For non-legal life partners, the statutory allowances are significantly lower, only 20,000 euros can be given every ten years, and 50 percent tax payments are also due. Accordingly, real estate cannot be given as a tax-free gift. The amount of the tax depends on the value of the property. If the property is rented out, the tax is calculated on 90 percent of the total value, 100 percent if the property is used as a home.
gift to the children
If the property is to be transferred to the owner’s children, this can also be done tax-free.
Parents can transfer the property to their child while they are alive, after which it allows the parents to continue living there until death. However, unlike in the case of legal partners, the value of the property is offset against the statutory tax allowance. This amounts to 400,000 euros per child and parent every ten years. To get around this”[] it can make sense to transfer a property in stages – for example 50 percent now and 50 percent in ten years”, explains specialist lawyer Paul Grtsch in an interview with the magazine Das Haus.
Parents should, however, take good care of themselves when transferring the property. In addition to a lifelong right of residence, the parents can also grant themselves the right to future rentals.
In this scenario, a value compensation can be created for any siblings. This can be done, for example, by donating securities. According to this, parents can transfer securities to the custody account of the other child tax-free, provided the bank is informed of the intention to donate. The tax office is also informed about this, but remains inactive as long as the amounts are within the donation allowance.
Henry Ely / Editor finanzen.net
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