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
untergasse436 May 2020 14:13Tassimat schrieb:
The terminally ill live longer.
Is person C still legally competent? If so, part of the property could be gifted directly to the third person or the will could be amended.True, but that is just as unromantic as discussing the separation of the builders before construction begins. Yet, it’s done anyway. In my opinion, C is no longer legally competent, although this has not been officially confirmed. Family arrangements regarding C’s financial matters are already being handled accordingly. A will exists and clearly favors A, and it is unlikely to be changed.Aside from that, A and B prefer to know their options before it becomes critical.
untergasse43 schrieb:
That's true, but it's just as unromantic as thinking about separating the property owners before construction. But that is a different matter than what you asked about.
Your initial post sounded like you wanted to pay as little tax as possible.
However, whether married or not, an inheritance is always considered part of the initial assets before marriage, so it is not included in the community property or marital gain.
Just do it properly through official channels. Pay inheritance and estate taxes... done. After that, you can separately decide whether to sell half to your spouse or allocate percentages in the land register.
If you want it to be romantic, just record 50:50 ownership when building, and that’s it.
untergasse436 May 2020 15:17That was just an example. There should be no trickery involved; I was only asking about the most practical solution and potential pitfalls. The current plan, as mentioned somewhere in the middle, is that A will inherit and pay the applicable taxes, B will be added to the land register with a 50% share after the marriage, and then construction will start. How much more or less each pays in the end will be settled between A and B.
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nordanney6 May 2020 16:25untergasse43 schrieb:
B will be registered as co-owner with 50% after the marriage.In this case, neither gift tax nor property transfer tax will apply.