How can I minimize the inheritance tax when transferring real estate?
May 1, 2022 | 40,00 EUR | answered by Tina Ullmann
Dear Mr. Kaiser,
I am faced with the challenge of transferring a property within my family and am wondering how I can minimize the inheritance tax in this process. The current situation is as follows: My parents would like to transfer their house to me, as they are no longer able to live in it due to their age. The house has a current market value of 500,000 euros. As I am the sole heir, a high inheritance tax would be incurred according to current tax rates.
I am concerned that the inheritance tax could take up a large portion of my parents' assets and therefore wonder if there are ways to minimize this tax burden. Are there legal structuring options or tax optimizations that I should consider?
What tax aspects should be considered when transferring real estate and what options are available to me to reduce the inheritance tax? Are there specific tax-free amounts or tax benefits that I can take advantage of? What steps should I take to carry out the transfer in a tax-efficient manner?
I would be very grateful if you could provide me with specific recommendations on how to minimize the inheritance tax when transferring the property.
Thank you in advance for your assistance.
Sincerely,
Gerd Kaiser
Dear Mr. Kaiser,
Thank you for your inquiry regarding the transfer of a property within your family and the associated inheritance tax. It is understandable that you are concerned about the potentially high tax burden and are looking for ways to minimize it. Indeed, there are various legal structuring options and tax optimizations that you can consider to reduce the inheritance tax.
First and foremost, it is important to know that in Germany, there are certain tax exemptions that are taken into account when calculating inheritance tax. For example, for children, the exemption is 400,000 euros. As the sole heir, you can fully utilize this exemption, so that only the exceeding amount is taxed.
One way to minimize the inheritance tax is to take advantage of tax benefits that apply to the transfer of real estate. For example, under certain conditions, tax exemptions for owner-occupied residential property can be claimed. Also, under certain conditions, a deferral of the inheritance tax can be requested to reduce the financial burden.
To carry out the transfer of the property in a tax-efficient manner, I recommend that you consult with an experienced tax advisor or notary early on. These professionals can provide you with comprehensive advice and specific recommendations on how to minimize the inheritance tax. Together, you can plan and implement the optimal steps to avoid tax pitfalls and efficiently carry out the transfer.
In conclusion, it is important to address the topic of inheritance tax early on and seek professional support. This way, you can ensure that the transfer of the property within your family is optimally structured from a tax perspective.
I hope that my information is helpful to you, and I am available for any further questions you may have.
Sincerely,
Tina Ullmann, Tax Advisor
