ᐅ Inheritance for Unmarried Couples and the Subsequent Construction Project
Created on: 5 May 2020 10:11
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untergasse43
Good morning!
I would like to know how you assess the following scenario:
Man A and Woman B are currently living together unmarried, but marriage is already planned. Man A may inherit a plot of land from Person C, who is not related to him for tax purposes, before the marriage. He will have to pay inheritance tax of 30%.
Man A and Woman B want to build on the inherited land soon and live together in the house.
Man A and Woman B would like to both be recorded in the land registry and jointly finance the house construction. They both understand the property ownership aspects. However, the question concerns the taxes involved. Ideally, they want to share the inheritance tax from their existing equity. Therefore, they have the following questions:
Thank you very much for your answers
I would like to know how you assess the following scenario:
Man A and Woman B are currently living together unmarried, but marriage is already planned. Man A may inherit a plot of land from Person C, who is not related to him for tax purposes, before the marriage. He will have to pay inheritance tax of 30%.
Man A and Woman B want to build on the inherited land soon and live together in the house.
Man A and Woman B would like to both be recorded in the land registry and jointly finance the house construction. They both understand the property ownership aspects. However, the question concerns the taxes involved. Ideally, they want to share the inheritance tax from their existing equity. Therefore, they have the following questions:
- Would gift tax apply to Man A if Woman B gives him half of the inheritance tax payment and they both jointly cover the inheritance tax? The half share of the inheritance tax will very likely exceed the exemption limit of 20,000 euros for a gift.
- Would any kind of tax apply if Man A registers Woman B in the land registry and they share the inheritance tax payment?
- Would any kind of tax apply if Man A registers Woman B in the land registry but covers the entire inheritance tax alone?
Thank you very much for your answers
Get advice!
But a loan from B to A could be an option, which would come into effect once married. Alternatively, B could initially pay the inheritance tax, and the portion of it borne by B could, for example, be used for the kitchen or something similar. And before the joint registration in the land registry, you should be married.
Only a tax advisor can suggest other options.
But a loan from B to A could be an option, which would come into effect once married. Alternatively, B could initially pay the inheritance tax, and the portion of it borne by B could, for example, be used for the kitchen or something similar. And before the joint registration in the land registry, you should be married.
Only a tax advisor can suggest other options.
cschiko schrieb:
But a loan from B to A would be one option, which would then be triggered when married In principle, yes. The question is what it achieves, or why it is being done. Is it because A does not have the amount available? If this is a possibility, please make sure to review the formalities regarding private loans carefully.
cschiko schrieb:
Or B pays the inheritance tax first, and the portion that B is supposed to cover is then used, for example, for the kitchen or something like that. And before registering ownership jointly in the land registry, you should be married. B cannot pay the inheritance tax. Only A can.
@face26: Okay, regarding the second point, that is a typo, as you can also see later where the letter B appears twice. As for the first point and the loan, that’s correct. But it sounds like A could afford to pay it themselves, and in that case, I would handle it that way. After the wedding, B would then be added to the land registry (which only involves some additional fees) and would provide "their half of the inheritance tax" for other matters.
untergasse435 May 2020 12:04cschiko schrieb:
@face26: Okay, regarding the second point, that was a typo, as you can also see further on since there is a double B mentioned there. As for the first point and the loan, that is correct. But it sounds like A can definitely afford to pay it themselves, and in that case, that’s how I would handle it. After the wedding, B is added to the land register (which only incurs additional fees) and makes "their half of the inheritance tax" available for other matters.That’s right. In a serious situation, A could also pay the inheritance tax alone.Otherwise, the pattern is clear: A initially pays the inheritance tax alone and remains the sole owner in the land register. After the wedding, B is added and uses the spousal tax allowance. The "excess amount" paid by A for the inheritance tax is then balanced out between both when making purchases related to the house construction.
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nordanney5 May 2020 20:41untergasse43 schrieb:
Is there any gift tax for Man A if Woman B gives Man A half of the inheritance tax and both then pay the inheritance tax together? The half share of the inheritance tax will very likely exceed the exemption amount of 20,000 euros for a gift.Formally, yes. But nobody really knows where the money used to pay the inheritance tax comes from. So the legal answer is: yes. And the practical, real-life answer is: no.untergasse43 schrieb:
Is there any kind of tax if Man A adds Woman B to the land register and both share the inheritance tax payment?Both matters should be considered separately. First, inheritance with inheritance tax (see point 1 if applicable). Then sale/gift if B is to be added to the land register. In case of a gift, gift tax applies. Since the whole process must be notarized, there are also notary fees and possibly real estate transfer tax if the share is sold.untergasse43 schrieb:
Is there any kind of tax if Man A adds Woman B to the land register and Man A would bear the inheritance tax alone?See the previous answer.All answers are from a legal amateur perspective (the legal part from university was some time ago; otherwise, these are common processes in real estate), disregarding exemptions.
untergasse43 schrieb:
Person A possibly inherits a plot of land from Person C, who is not a tax-related relative, even before marriageTerminally ill people live longer.Is Person C still legally capable? Then it might be possible to gift part of the property directly to the third person or to amend the will.