Have you ever thought about the inheritance of your property? Can your heirs afford the inheritance tax or will they perhaps have to sell the property? Is there a risk of a dispute among your heirs? In order to find a solution that is in your best interests, it is advisable to settle the property inheritance at an early stage, for example by making a gift.
Settling the inheritance during your lifetime offers various advantages and allows you to organize the estate according to your wishes and avoid potential disputes among the heirs.
The gift
In the case of a gift, the owner transfers the property to one or more heirs during their lifetime. This can simplify the transfer process, as the property does not become part of the actual estate and therefore does not have to go through a lengthy and costly inheritance process.
The gift tax
Taxes may be payable on a gift of real estate. The amount of tax depends on the value of the property and the tax-free amount of the donee. The amount of the tax-free allowance in turn depends on the family relationship. The gift tax rates are graduated and increase as the value of the gift increases. The exact tax rates can vary depending on the federal state, but generally range between 7 and 30 percent. Seek advice from an experienced tax expert in your region.
The allowances
The following allowances apply in Germany:
- Spouses and registered partners: 500,000 euros
- Children and stepchildren: 400,000 euros
- Grandchildren and great-grandchildren: 200,000 euros
- Parents and grandparents: 100,000 euros
- Siblings: 20,000 euros
- Other acquirers (e.g. non-relatives): 20,000 euros
The value of the property
A local quality estate agent will determine how much your property is currently worth. He is very familiar with the procedures to be used and takes into account the current developments on the real estate market that influence the property value.
Protect yourself as a donor
However, it is important to note that arranging the inheritance of real estate during your lifetime can also pose some challenges. As the donor, you should protect yourself, for example by having a right of reclaim contractually stipulated so that you can get the property back if your donee becomes insolvent and may be forced to sell the property. You can also impose further conditions:
- Right of residence
- Usufructuary right
- Prohibition of rental, resale, etc.
- Obligation to care for the donor (also to protect against revocation by the state in the event of long-term care)
It is also advisable to seek professional legal and tax advice to avoid potential risks. It is advisable to consult an experienced local real estate expert for all property-related questions.
Are you unsure what the best solution is for your inherited property? Get in touch with us! We will be happy to advise you.
Notes
For reasons of better readability, the generic masculine is used in this text. Female and other gender identities are explicitly included where this is necessary for the statement.
Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case
