Give away or bequeath real estate?

As an owner, you may think more often about whether you should bequeath your property or rather give it away during your lifetime. Giving away can sometimes have advantages. However, not everyone saves the same amount in the process. That is why real estate owners should know when and how giving away is worthwhile.

Whether gift or inheritance - the treasury asks in both cases to the cash. And not only that, also the tax rate and the tax allowances are the same in both cases. In the case of both gifts and inheritances, they depend above all on the degree of relationship of the beneficiary. For example, an allowance of 500,000 euros applies in all cases for spouses, 400,000 euros for children, and the scale continues up to 20,000 euros for friends, siblings or even non-registered partners. For the remaining part of the property value, a tax rate of between 7 and 43 percent is due - depending on the value of the property. An important exception: Married owners can transfer the owner-occupied property to their spouse completely tax-free, regardless of how much it is worth. Also this regulation finds equally on given away like on bequeathed real estates application.

Gifting as tax savings model?

So how then can taxes be saved by a gift? In some cases, this is possible, whereby two aspects play a role. On the one hand, the above-mentioned tax allowances for gifts do not only come into play once, but every ten years again. You can therefore give away your property "in installments" and ensure that the partial value transferred in each case is below the tax-free amount. Over decades, a transfer without tax deduction is possible in this way, although this requires very long-term planning, which is unlikely to be realistic. A second aspect is that an early valuation can have tax advantages. Up to your death the real estate value could rise strongly, and that would mean for your heirs that then a higher inheritance tax would result.

Avoid inheritance dispute, secure retention of the real estate in the family

While the tax saving is rather a special case, the crucial arguments for a donation are to be looked for rather elsewhere. A decisive motive: you want to ensure that the property remains in the family for the long term. If you bequeath, it can easily happen after your death that the community of heirs cannot agree on the division of the inheritance. You can record your will in detail in a will, but this cannot prevent an inheritance dispute with certainty. Nor can it prevent the possible situation in which your heirs have to sell the house in order to pay off all those entitled to the inheritance and to pay the inheritance tax. In this case, a gift is often the better alternative. You can attach special conditions to it that preclude the sale of the property. It is also advisable to secure a usufructuary right for the property. The house then already belongs to the donee, but you can remain living in it for life, and even if you no longer want to occupy the property yourself, you can also rent it out.

Do you want to know whether it is wiser in your case to bequeath or give away your property? Contact us! We will be happy to advise you.

You need more information?

https://www.bmjv.de/DE/Themen/FamilieUndPartnerschaft/Erbrecht/Erbrecht_node.html

https://www.test.de/Erbrecht-Zehn-Irrtuemer-rund-ums-Erbe-5398189-0/

https://de.wikipedia.org/wiki/Erbe

Legal notice:This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific individual case clarified by a lawyer and/or tax advisor.

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