Gift Tax on Real Estate: Important Tips
The gift tax on real estate in Germany is a complex topic that is of great importance to both investors and savers. Here are some valuable tips and legal aspects that can help reduce the tax burden:
1. Utilize Allowances
The gift tax is levied on the value of the gift minus the personal allowance. In Germany, there are different allowances for various degrees of kinship:
- Tax Class I (Spouses, Children): €500,000
- Tax Class II (Siblings, Nieces/Nephews): €20,000
- Tax Class III (all other relatives): €20,000
These allowances can be fully utilized every 10 years.
2. Tax Classes and Tax Rates
The amount of gift tax depends on the market value of the property and the tax class. Here are the tax rates for the different tax classes:
| Residual Amount | Tax Class I | Tax Class II | Tax Class III |
|---|---|---|---|
| up to €75,000 | 7% | 15% | 30% |
| up to €300,000 | 11% | 20% | 30% |
| up to €600,000 | 15% | 25% | 30% |
| up to €6 million | 19% | 30% | 30% |
| up to €13 million | 23% | 35% | 50% |
| up to €26 million | 27% | 40% | 50% |
| over €26 million | 30% | 43% | 50% |
3. Gradual Gifts
One way to reduce the tax burden is to make gifts in installments. By spreading the gift over several years, you can utilize the allowance more efficiently and reduce the tax liability.
4. Right of Residence or Usufruct
By registering a right of residence or usufruct in the land register, the market value of the property can be significantly reduced, leading to a lower tax burden.
5. Chain Gifts
A chain gift, where the property is passed on through several individuals, can also help minimize the tax burden. However, this is legally complex and should be carefully planned.
6. Self-Use for Married Couples
Married couples can save taxes through self-use of the property. If one spouse uses the property, this can affect the taxable value of the gift.
7. Legal Disputes with the Tax Office
It is important to seek proper legal advice to ensure compliance with all legal regulations. Careful planning and documentation can help avoid disputes with the tax office.
In summary, the gift tax can be significantly reduced through careful planning and the use of legal options. However, it is advisable to consult a tax advisor or lawyer to develop the best strategy for your individual situation.