What tax aspects do I need to consider when gifting a property?
November 12, 2023 | 50,00 EUR | answered by Tatiana Seiler
Dear Tax Advisor,
My name is Andrea Schönecker and I am faced with the question of which tax aspects I need to consider if I want to gift a property. The background is that I own an apartment that I would like to transfer to my son. This gift is purely for family reasons and I want to ensure that I handle the tax implications correctly.
The current situation is as follows: The apartment has a current market value of 200,000 euros and is debt-free. My son agrees to receive the property as a gift from me. Now I am concerned about whether and to what extent I have to pay taxes and what tax implications the gift could have. I want to avoid unexpected tax burdens.
Therefore, my question to you is: What tax aspects do I need to consider when gifting a property? Are there any tax-free allowances or tax advantages that I can take advantage of? What tax consequences would the gift have for me and my son? What options are available to minimize the tax burden? I would be very grateful if you could provide me with detailed information and recommendations so that I can plan the gift optimally.
Thank you in advance for your support.
Sincerely,
Andrea Schönecker
Dear Mrs. Schönecker,
Thank you for your inquiry regarding the tax aspects of gifting a property. It is understandable that you are thinking about this and want to ensure that everything is handled correctly and tax-optimized.
When gifting a property, there are various tax aspects to consider. Firstly, it is important to know that gifts between living individuals are generally subject to gift tax. This means that as the donor, you would have to pay taxes on the value of the gifted property. In your case, with a market value of 200,000 euros, this would mean that you would have to pay gift tax on this amount.
However, there are also tax-free allowances that can be utilized. For parents gifting a property to their children, for example, there is an allowance of 400,000 euros every 10 years. This means that as a mother, you can gift the apartment to your son tax-free up to this value. In your case, the gift would fall within the allowance and therefore be tax-free.
It is important to properly document the gift and notify the tax office to avoid any potential tax consequences. Your son also needs to declare the gift in his tax return, but as the recipient, he is not subject to tax.
There are various ways to minimize the tax burden. One option would be to value the property at a lower value to fully utilize the allowance. You can also consider tax planning strategies to carry out the gift in a tax-efficient manner.
It is advisable to seek advice from a tax advisor to explore all tax options and plan the gift optimally.
I hope this information has been helpful to you, and I am available to answer any further questions you may have.
Best regards,
Tatiana Seiler
