Tax treatment of a payout within the framework of a transfer agreement
December 22, 2009 | 20,00 EUR | answered by Michael Herrmann
My wife's father died in 1987. He left behind his wife and four children. Besides the entry of the community of heirs in the land register, no distribution of assets or payment took place at that time.
Now the house and land are to be transferred to a grandchild of the widow. For this purpose, a draft transfer agreement has been sent to us. According to this, my wife is to be paid 10,000 EUR next year. My wife and I file our income separately. Income in 2008, my wife 30,000 EUR, me 26,000 EUR (+early retirement supplement).
Is it correct to assume that in this case my wife will have to fully declare the 10,000 EUR and pay taxes on it? Would it be more advantageous to sell the buildings and land only after the death of my mother-in-law and distribute them to the heirs, as there is a tax-free allowance under inheritance law?
Dear inquirer,
First of all, thank you for your inquiry, which I would like to answer in the context of an initial consultation based on the information you provided and the background of your involvement. The response will be based on the facts presented. Missing or incorrect information about the actual circumstances can affect the legal outcome.
In answering the question, I assume that the community of heirs is not engaged in commercial activities and that the house was used for residential purposes by your mother-in-law.
The dissolution of the community of heirs only results in taxable income if specified in the Income Tax Act. Mere wealth equalization does not constitute income.
It is possible that the sale of the share in the house could be considered a private sale transaction. However, since the house has been in the possession of the community of heirs since 1987, more than 10 years, there is no taxable event to be identified here as well. From an income tax perspective, no burden is to be expected.
I hope that these explanations have given you an initial overview of the situation, and I remain
Yours sincerely,
Michael Herrmann
Diploma in Taxation (FH)
Tax consultant
