What are the tax aspects to consider when receiving inheritances in the form of capital assets?
April 20, 2024 | 40,00 EUR | answered by Anna Karpinski
Dear Sir/Madam Tax Advisor,
My name is Ammelie Maier and I am facing the situation of receiving an inheritance in the form of capital assets. My uncle recently passed away and left me a significant amount of money. Now I am thinking about the tax aspects associated with this.
As of now, I have no experience with the taxation of capital gains and therefore I am unsure about the best course of action in this situation. My concern is that I may have to pay high taxes and thus lose a large portion of the inherited money.
My question to you is: What tax aspects do I need to consider when receiving inheritances in the form of capital assets? Are there ways to minimize the tax burden or even completely avoid it? How should I best invest the inherited capital to achieve tax benefits?
Thank you in advance for your support and I look forward to your expert advice.
Sincerely,
Ammelie Maier
Dear Mrs. Maier,
Thank you for your inquiry regarding the tax aspects of inheritances in the form of capital assets. First and foremost, I would like to offer my condolences on the loss of your uncle and I hope that I can assist you with my advice during this difficult time.
When you receive an inheritance in the form of capital assets, the income from these assets is subject to capital gains tax. This tax is levied on interest income, dividends, and capital gains. The amount of tax depends on your personal tax rate, which is based on your income. However, there are ways to minimize or even avoid the tax burden.
One way to reduce the tax burden is to make use of exemptions. In Germany, there is an annual exemption of 801 euros for singles and 1,602 euros for married couples. If your capital gains are below this amount, they are tax-free. Additionally, you can choose to have capital gains up to 30,000 euros per person per year taxed at a flat rate of 25%, without having to specify your actual income in detail.
Another way to save taxes is to invest the inherited capital in a tax-optimized manner. You should ensure that you diversify your investments and use various forms of investments. For example, you can invest in tax-optimized funds or in tax-advantaged investment forms such as Riester or Rürup contracts. Additionally, an early gift to your children or grandchildren can bring tax benefits, as gifts up to a certain amount are tax-free.
It is important that you consult with a tax advisor early on to discuss your individual situation and develop a tax-optimized strategy. A good tax advisor can help you minimize your tax burden and efficiently invest your inherited capital.
I hope that this information has been helpful to you. If you have any further questions or would like a more detailed consultation, I am available for a personal online consultation session.
Best regards,
Anna Karpinski
