Are there exceptions to the gift tax?
April 22, 2024 | 55,00 EUR | answered by Bernd Schreiber
Dear tax consultant,
my name is Daniel Schreiber and I am facing an important decision regarding a gift. My grandfather wants to transfer a property to me that has significant value. Now I am concerned about the gift tax that I would have to pay in case of a transfer.
I have heard that there are exceptions to the gift tax and would like to learn more about them. Are there ways in which I can legally avoid or at least reduce the gift tax? What requirements must be met in order to benefit from these exceptions?
It is very important to me that I accurately assess the financial implications of a gift and do not experience any unpleasant surprises. I want to ensure that I do not jeopardize my inheritance through high taxes while also respecting my grandfather's wishes.
I look forward to your expert advice and hope that you can provide me with further information on the exceptions to the gift tax. Thank you in advance for your support.
Sincerely,
Daniel Schreiber
Dear Mr. Schreiber,
Thank you for your inquiry regarding gift tax in relation to the transfer of a property by your grandfather. It is understandable that you are concerned about the financial implications and want to ensure that you do not experience any unpleasant surprises.
In Germany, every gift is subject to gift tax. However, there are indeed certain exemptions and tax-free allowances that allow you to avoid or at least reduce gift tax. These allowances apply to gifts made within certain family relationships. In the case of a gift between grandparents and grandchildren, the current tax-free allowance is €200,000 every 10 years. This means that you can receive a gift tax-free up to this amount.
If the value of the property exceeds the tax-free allowance, you will have to pay tax on the amount exceeding the allowance. The amount of gift tax depends on the family relationship and the value of the gift. As a general rule, the closer the family relationship, the lower the tax rate. For grandchildren, the lowest tax rate is in tax class I, which means that you will pay a lower tax rate than distant relatives or non-relatives.
There are also other ways to avoid or reduce gift tax. One option could be making a gift with a reserved usufruct, where the donor retains the right to use the property. This can result in reducing the value of the gift and therefore reducing the tax burden. However, it is important that such arrangements are implemented properly and legally to avoid any potential tax consequences.
It is advisable to consult a tax advisor or lawyer to optimize your gift for tax purposes. I am happy to provide you with individual advice and further information on exemptions from gift tax. Please do not hesitate to contact me to clarify your questions and find the best solution for your situation.
Best regards,
Bernd Schreiber
