Inheriting or gifting property: How to save taxes
The loss of a loved one is emotionally stressful enough - but when a property is inherited, the state also asks for money. The Donation during your lifetime can be a favourable alternative to save taxes. However, not every gift is automatically tax-free. When is it really worth making a gift? And how is the property value determined? Find out everything you need to know here.
Why the gift can make sense
Property accounts for a significant proportion of inheritances in Germany. According to the Federal Statistical Office, inheritances and gifts totalled almost 109 billion euros in 2016, a third of which was taxable. By 2020, this figure is expected to rise to 330 billion euros - three quarters of which is property. To prevent the tax office from making too much money, many owners consider donating their property while they are still alive.
Hannelore B., 81 years old, is a typical example. The house she has lived in for decades is increasingly becoming a burden. The stairs are becoming a challenge and she can barely manage to look after the house. She is thinking about moving into an age-appropriate flat. But what will happen to her house then? Her son Thomas is supposed to inherit it one day, but is there perhaps a better solution?
The tip: Donation instead of inheritance
A friend suggests that Hannelore transfer the house to her son Thomas now - in other words, give it away. The advantage? Taxes can possibly be avoided. Curious but unsure, Thomas turns to a notary. There they find out:
- A gift is tax-free as long as the value of the property does not exceed certain tax-free amounts.
- Allowances depend on the degree of relationship: parents can give children up to 400,000 euros tax-free.
But how much is the house actually worth? The notary explains that the local tax office estimates the property value. However, special circumstances such as a damp cellar or a nearby motorway are often disregarded. not considered. As a result, the value of the property can be set higher than it actually is on the market - and suddenly the gift becomes taxable.
The solution: an independent valuation report
To obtain certainty, the notary recommends consulting a property expert such as a Broker with the valuation of the property. An estate agent not only takes into account the condition of the property, but also:
- Current market situation and sales prices of comparable properties
- Individual defects or special features (e.g. need for renovation)
- The location and infrastructure of the neighbourhood
Thomas takes this advice and finds an experienced estate agent on the internet. With his expertise and local market knowledge, the expert determines a realistic property value. The good news: the house is below the tax-free threshold and Hannelore can give it to her son tax-free. Both are relieved - the path to age-appropriate living is clear and the future of the house is secure.
Get advice now
Robert Schüßler
Property valuer (EIA and IHK)
Photo: Example
