Ask a tax advisor on the topic of Gift tax

Donation, usufruct allocation for multiple owners

September 27, 2012 | 30,00 EUR | answered by Michael Herrmann

We intend to transfer our house to our son and are each registered as owners in the land register with a 1/2 share. Usufruct reservation rights are to be granted until the death of the longer living parent. Total value approximately 1,200,000 euros, total capital value of the usufruct approximately 400,000 euros. Are these two tax-free gifts each worth 1/2x(1,200,000-400,000) - 400,000 (exemption) = 0 euros taxable?

Thank you.

Michael Herrmann

Dear inquirer,

First of all, thank you for your inquiry, which I would be happy to answer based on the information provided and in the context of your commitment within an initial consultation. The response is based on the factual description. Missing or incorrect information about the actual circumstances can affect the legal outcome.

I assume in my response that the parties intend to make a free transfer of their respective co-ownership share. Yes, there are two gifts here with reservation of usufruct. Each gift is to be evaluated separately. The calculation is made based on the approximate numbers given as follows:

Value of the property (1/2):
€600,000 minus usufruct of €200,000 = €400,000.

The respective taxable value of the gifts remains tax-free for the recipient in tax class I up to €400,000, provided that they have not received any gifts from the same donor in the last 10 years. These would need to be taken into account.

I hope that these details have given you a sufficient overview of the situation within the scope of your commitment and this initial consultation, and remain

Yours sincerely,

Michael Herrmann
Dipl.-Finanzwirt (FH)
Tax consultant