Income tax after donation of the house with usufruct rights
January 23, 2022 | 35,00 EUR | answered by Steuerberater Bernd Thomas
Dear Sir or Madam,
we are planning to transfer our house (approx. €500,000) to our daughter during our lifetime as a gift, in order to take advantage of the tax savings with a tax exemption of 2 x €400,000.
We will have a usufruct right notarized in order to live in the house rent-free for our lifetime. However, we will continue to pay the ongoing costs (insurance, property tax, repairs, etc.).
Question:
Does our daughter need to declare the property (which will then be transferred to her in the land register) in her annual income tax return, even though she does not have any income from it?
In this case, will the tax office determine an annual value of the usufruct right in order to calculate the gift tax in addition to the value of the house? Is it possible that we, as the usufruct beneficiaries, will also have to pay any taxes?
Thank you.
Dear questioner,
I am happy to answer your inquiry based on the information provided in a first consultation on frag-einen.com. The response is based on the factual information you provided. Missing or incorrect information can affect the legal outcome.
As long as the daughter does not generate any income from the property, she does not have to include a rental and leasing income statement in her tax return.
The value of the usufruct is deducted from the value of the transferred house to determine the gift tax.
As a usufructuary, you only pay income tax if you generate income from the usufruct, such as by renting to third parties. As long as you only use it for personal use, this is not relevant for tax purposes.
Best regards,
Bernd Thomas
Tax advisor
Information in accordance with DL-InfoV: Tax advisor Dipl.-Kaufmann (FH) Bernd Thomas, Tax advisor, Jöhrensstraße 1, 30559 Hannover, member of the Chamber of Tax Advisors Lower Saxony, member number 146580, professional liability insurance with R+V Allgemeine Versicherung AG, Mittlerer Pfad 24, 70499 Stuttgart, insurance sum: 250,000 euros for each individual damage event; annual maximum benefit: 1,000,000 euros (for all damages in one insurance year); the professional regulations apply, in particular the Tax Advisory Act (StBerG), implementation regulations to the Tax Advisory Act (DVStB), professional code (BOStB), Tax Advisor Remuneration Regulation (StBVV) (regulations can be viewed at: https://www.berufsrecht-handbuch.de/, http://www.gesetze-im-internet.de/stberg, www.gesetze-im-internet.de/stbvv/), the professional title of Tax Advisor was awarded in the Federal Republic of Germany.
