What is the tax-exempt amount for gift tax?
July 20, 2024 | 50,00 EUR | answered by Bernd Schreiber
Dear tax advisor,
I am Emil Zollmann and I am considering giving my son a larger sum of money as a gift. I am thinking about the gift tax and wondering what the tax-free allowance is in my case.
The situation is as follows: My son urgently needs financial support to buy a house. I would like to help him by giving him a larger sum of money. However, I am unsure about the tax-free allowance for gift tax and whether I might have to pay this tax.
The current situation is as follows: My son is married and has two children. He is employed and earns an average income. I am retired and have savings that I would like to use to financially support my son.
My concerns are that I may have to pay a high gift tax due to the gift, and this could impact my financial situation. I want to ensure that my son receives the support he needs without having to pay high taxes.
Therefore, my question to you as a tax advisor is: What is the tax-free allowance for gift tax in my specific case? Are there ways to avoid or reduce gift tax? What tax aspects should I consider when making the gift to minimize potential taxes?
I thank you in advance for your support and look forward to your response.
Sincerely,
Emil Zollmann
Dear Mr. Zollmann,
Thank you for your inquiry regarding gift tax and your considerations to financially support your son. It is understandable that you are thinking about possible tax implications and want to ensure that your son receives the financial assistance he needs.
In your specific case as a retiree who wishes to gift a larger sum of money to his working son, the tax-free allowance for gift tax is as follows: For each child, the tax-free allowance is 400,000 euros. Since your son is married, this allowance would increase to a total of 800,000 euros. This means that you can gift your son money up to this amount without incurring any tax.
If you wish to gift your son more than the allowance, the amount exceeding the allowance would be subject to gift tax. The amount of gift tax depends on the relationship and the value of the gift. However, there are ways to avoid or reduce gift tax.
One way to minimize gift tax is to spread the gift over several years. For example, you could gift your son a portion each year to stay below the allowance. This could help reduce the overall gift tax.
Furthermore, you could also consider granting the gift to your son as a loan that he can repay over a longer period of time. This way, the gift would not be considered as such and no gift tax would apply.
It is important to inform yourself about all tax aspects before making the gift and seek professional advice if necessary. A tax advisor can help you develop the best strategy to minimize any potential taxes and not negatively impact your financial situation.
I hope this information is helpful to you and wish you success in your decision. If you have any further questions, I am happy to assist.
Best regards,
Bernd Schreiber
