Transfer agreement
February 14, 2011 | 20,00 EUR | answered by Oliver Burchardt
Hello, my brother (only brother) is supposed to inherit my parents' condominium. This is also my wish, as I live in the same two-family house. My parents (76 years old + 75 years old) will have a lifelong right of residence. The value of the condominium is estimated at approximately €135,000. When my brother moves into the apartment, I am supposed to receive €35,000 from my brother as part of my inheritance (the amount is correct, as an advantage of mine was taken into account).
1. In the transfer agreement, we should state the annual value of the right of residence. What is the annual value of the right of residence for, and does it have any tax implications?
2. Does anyone have to pay inheritance tax at all?
3. Is there anything else to consider from a tax perspective?
Best regards, L.K.
Dear inquirer,
Thank you for your inquiry, which I would like to answer as part of an initial consultation.
Please note that the tax assessment is based on the information provided. Changing, omitting, or adding information can affect the tax result.
The annual value of the right of residence granted to your parents is a burden for you, as you (or your brother) cannot use the apartment. This burden reduces your taxable acquisition and can be deducted from the tax base of inheritance tax. There is only one exception: If you use the low value according to § 198 BewG (normally the law provides for a fixed valuation), the right of use is deducted in this valuation. In this case, you cannot deduct the value of the right of use again from the tax base.
Whether inheritance tax is due in the mentioned scenario, I cannot answer without specific knowledge of all circumstances. If the described acquisition was the only transaction within the last 10 years and the taxable acquisition is below the tax-free amount of €400,000, no inheritance tax is due. If assets have already been transferred by gift within the last 10 years, you must check if you exceed the exemption limits. The same applies if assets are transferred in the next 10 years (whether by gift or due to the death of your parents). In these cases, the acquisition described here is also subject to inheritance tax.
The offsetting of benefits is not relevant for calculating the taxable acquisition. The compensatory payment before offsetting the benefit is the basis for calculating inheritance tax.
From a tax perspective, it should also be checked whether there is any reason against transferring the apartment only upon death. Under certain conditions (use as a family home, not larger than 200 sqm, immediate continued use as a family home), the acquisition in this case is tax-free, § 13 Abs. 4c ErbStG.
I hope I have been able to help you as part of your assignment.
Best regards,
Oliver Burchardt
Tax advisor
