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Detached house: If several children inherit, disputes can arise
Photo: Gustafsson / Westend61 / IMAGO
Some people have problems that one would like to have.
But problems remain.
For example, inheritance and inheritance.
The elderly parents of an only child observe with concern that the value of their own house has risen significantly and is possibly worth so much that their child will have to pay a hefty five-digit inheritance tax when they inherit it.
There are ways to reduce the tax now or even avoid it altogether.
Completely legal and desired by the state.
Therefore, everyone who is going to inherit a property should know them.
Around 430,000 properties are inherited each year.
And according to the Federal Statistical Office, more than 20 billion euros in real estate assets are registered for inheritance tax - and that is only part of the inherited assets.
Because if a property does not lead to an inheritance tax because it is worth less than the allowances of the heirs, it falls out of the statistics.
A condominium for 400,000 euros alone would not lead to inheritance tax for a child.
However, if the inheritance is large enough and no precautions have been taken, the inheritance tax can sometimes amount to tens of thousands of euros.
For every €100,000 inheritance above the tax-free allowance, spouses and children have to pay €11,000 in taxes.
Nephews or siblings even 20,000 euros.
You belong to inheritance class II. Friends or unmarried partners even belong to tax class III and would have to pay taxes of 30,000 euros for every 100,000 euros above the allowance
This control problem can be elegantly avoided.
And that's not even complicated.
inheritance as a blessing
First of all: If the inheritance is so large that inheritance tax is threatened, this is not a problem at first, but a blessing.
The prospect of a 400,000 euro house from their parents lets many people, especially those with not so high incomes and not so rosy economic prospects, sleep much better.
If the house is owned equally by both parents, each parent could even inherit 400,000 euros without the child having to pay inheritance tax.
If the value of the house is significantly higher and inheritance tax has to be paid at the end, it can usually be settled well with such an inheritance.
Homes can be mortgaged or rented out to raise the necessary money for inheritance tax.
And to be honest: the heir didn't work for this financial blessing.
There are of course a number of steps one can take to reduce inheritance tax.
Before it becomes due, spouses can inherit up to 500,000 euros.
Children can inherit EUR 400,000 from each parent and grandchildren can still inherit EUR 200,000 from grandpa and grandma.
For friends, the allowance is only 20,000 euros.
There are always people, like the prototypical reader of the “Frankfurter Allgemeine Zeitung”, who, in an email to the readers of the newspaper, does not find the allowance of 400,000 euros for the children generous: “That is not even enough for a small apartment!
The allowance should be €1 million, including for nephews if you don’t have children of your own!”
But most heirs and bequeathers can live with that if they make good use of the legal rules.
In the case of real estate, this is comparatively easy.
Giving away instead of inheriting
One of the most elegant ways to avoid an impending inheritance tax is to give away parts of the inheritance beforehand.
This also works with real estate – and is used diligently.
The »Süddeutsche Zeitung« reports that in 2020 real estate worth a good 11 billion euros was given away - i.e. about half as much as was inherited in tax-relevant real estate assets.
The Federal Statistical Office has determined that between 2019 and 2020 alone, the state's income from gift tax rose by 45 percent - to 1.8 billion euros.
There are no more recent figures.
Giving away is an elegant solution for several reasons.
Firstly, because you can give away just as much real estate assets tax-free as you can inherit.
EUR 500,000 for the spouse, EUR 400,000 each for children and EUR 200,000 each for grandchildren.
The advantage: If the inheritance occurs at least ten years later, the relatives can again use the same amount of allowances when inheriting – 500,000, 400,000, 200,000 euros.
But giving with warm hands has another invaluable advantage: it helps to avoid arguments.
The recipients can already dispose of the gifts and the givers can watch the joy.
If you have three children and are wealthy enough to give each child one of the condominiums, you avoid children fighting over the inheritance.
Anyone who dies without an additional inheritance regulation inherits a third of all three apartments to the three children.
If you then want to renovate, let or sell, all three heirs have to come to an amicable agreement - and that often doesn't work.
But giving away also has a risk: gone is gone.
It hurts when the recipient sells the house and runs off with the fortune. If he turns the family villa into a whorehouse or flattens it in favor of a townhouse, you as the donor can no longer influence this without separate contractual rules.
Unless you have arranged it beforehand.
The golden mean is the so-called usufruct rule.
The couple gives the house away to their daughter, but retains the usufruct of the property.
This means that the two elderly people can live there rent-free - and if they have to move again because of the care, they are entitled to the rental income from the house, which they can use for the care costs.
Nice side effect: For the daughter who received the gift, the usufruct is deducted as a cost from the value of the property.
If the two parents give away their house, of which they each own half, to their daughter and have agreed usufruct accordingly, the house can be worth more than 800,000 euros without the daughter having to pay gift tax.
How much is deducted from the value depends on the age of the usufructuary, i.e. the parents.
The residential value of the property is calculated for this.
The advantage of such gift models is also growing year by year.
The tax office is not interested in whether the value of the property increases significantly after the donation.
The value of the property at the time of donation is decisive.
And the local tax office determines this precisely at the time of the donation.
You can also have the real estate value determined by a state-certified appraiser.
The tax office is then bound to its assessment.
And then there is another common way to avoid inheritance tax.
If the parents have lived in the house for at least ten years and inherited it as a family residence and the daughter moves in there no later than six months after the death of the parents and stays there for ten years, then this residence can be up to 200 square meters in size - and as expensive as it is want.
Inheritance tax is not due.
Not even if the heiress could sell the penthouse for two million euros.
The variant that close family members move into the property is actually still the most common variant of inheritance in Germany.
Says the Federal Statistical Office.
And it's cheap too.
