Ask a tax advisor on the topic of Gift tax

Gift tax on repayment rates

May 8, 2013 | 50,00 EUR | answered by StB Steffen Becker

Hello,
I have a question regarding gift tax.
My partner and I (not married!) are buying two equally sized condominiums.
Purchase price is €220,000. The entire purchase price is financed by a bank.
We both have a loan with joint liability.
Monthly total rate is €1,150. There is also a repayment account at the bank that is in my partner's name.
One of the apartments is occupied by my partner and me, and the second apartment is rented out to my partner's son.
My partner is the sole owner of the rented apartment.
Ownership of our apartment is 99% my partner's and 1% mine.
The repayment account is paid monthly as follows:
€500 rent from my partner's son
€500 from my partner
€150 from me
My question:
Is it possible that the tax office will at some point assume that I have made a gift to my partner, since we have a joint loan and it is assumed that I am making half of the repayments?
Monthly net income of my partner including widow's pension: €1,550
My monthly net income: €1,800
Son's income: €1,400
Note:
The reason I am only 1% involved in the property ownership is because I have a son from a previous relationship, and I do not want to leave him half of the apartment as part of his inheritance.

StB Steffen Becker

Dear inquirer,

Thank you for your inquiry. I will answer this within the scope of an initial consultation based on the information provided. Missing or incorrect information can affect the legal outcome.

You have taken out a joint loan, meaning that in the event of default on the loan, the bank can equally approach each of you, and each of you is liable to the bank for the loan.

Therefore, there is a basic right of offset for your partner against you if a joint loan has been taken out but is being repaid unevenly.
Furthermore, you both equally use the jointly occupied apartment, but only one of you is a 1% owner - in my opinion, there is also a right of offset for your partner against you.
If the offsetting of claims is not desired, in my opinion, these can be seen as gifts from your partner to you (§ 7 para. 1 sentence 1 no. 1 ErbStG).

I recommend that you contact a lawyer in this regard to make any necessary arrangements for both of you internally (e.g. loan agreement between the two of you, etc.).

I hope I could assist you further.

Kind regards,
Steffen Becker