What are the tax implications of transferring capital assets to my children?
May 13, 2024 | 40,00 EUR | answered by Paula Köhler
Dear Tax Advisor,
My name is Christian Karpinski and I am currently looking into transferring capital assets to my children. I have accumulated some assets and would like to financially support my children by transferring a portion of my capital assets to them. However, I am concerned about the potential tax implications that such a transfer could have.
Currently, I am unsure of how transferring capital assets to my children could affect them tax-wise. I am wondering if gift taxes or other taxes could be applicable and what the potential amounts might be. Additionally, I am interested in whether there are ways to minimize this tax burden and what tax regulations I need to consider.
My goal is to financially secure my children while avoiding possible tax pitfalls. Therefore, I would greatly appreciate it if you could provide me with an overview of the tax aspects of transferring capital assets to my children and suggest possible solutions. I want to ensure that I am aware of all tax consequences in advance and can plan accordingly.
Thank you in advance for your support and expertise in this area.
Best regards,
Christian Karpinski
Dear Mr. Karpinski,
Thank you for your inquiry regarding the transfer of capital assets to your children. It is very responsible of you to inform yourself in advance about the tax implications of this measure in order to avoid possible pitfalls.
When transferring capital assets to your children, gift tax may generally apply. Gift tax is a tax imposed on the gratuitous transfer of assets, such as money, securities, or real estate. The amount of gift tax depends on the value of the transferred assets and the relationship between you and your children.
In Germany, there is a tax-free allowance for gifts that can be used every 10 years. The allowance is currently €400,000 per child for children. This means that you can transfer assets to your children tax-free up to this amount. If the value of the transferred assets exceeds the allowance, gift tax will be levied. The exact amount of tax depends on the relationship and the value of the transferred assets.
To minimize the tax burden when transferring capital assets to your children, there are various planning options available. For example, you can plan tax-optimized asset transfers by spreading the transfer over a longer period of time or by setting up tax-optimized gift agreements. Lifetime gifts can also be a way to reduce the tax burden.
It is important to carefully consider the tax regulations and, if necessary, seek professional help. A tax advisor can assist you in planning and implementing the transfer of assets and help you avoid tax pitfalls.
I hope this information is helpful and gives you an initial overview of the tax aspects of transferring capital assets to your children. If you have further questions or require individual advice, I am at your disposal.
Kind regards,
Paula Köhler
