Yes, inheritance tax can quickly become a significant financial burden. However, those who are familiar with the tax-free allowances and legal regulations can considerably reduce their tax liability. This article explains how inheritance tax is calculated and what strategies are available to save on taxes.
How high is the inheritance tax?
The amount of inheritance tax depends on three main factors:
- The degree of kinship between the deceased and the heir.
- The amount of the estate.
Example: A daughter inherits €500,000 from her father. Due to her tax-free allowance, €400,000 of the inheritance remains tax-free. An inheritance tax of 11% is levied on the remaining €100,000 – i.e., €11,000.
Inheritance tax on real estate
Real estate can also be inherited tax-free under certain conditions, including the following:
- The heir (spouse or child) lives in the property for at least 10 years.
- The living space of the property does not exceed 200 square meters – this applies only to children.
Tax savings through gifts
Gifts made during one’s lifetime are one of the most effective strategies for reducing inheritance tax. The tax-free allowances also apply to gifts and can be used again every ten years. Significant tax advantages can be achieved through timely asset transfers.
Strategic planning is crucial.
Strategic estate planning and the use of statutory tax allowances make it possible to significantly reduce the inheritance tax burden. Early estate planning is therefore of great importance.
Attorney Cocron will advise you competently
Our law firm assists you with estate planning and the optimal use of tax allowances. Attorney István Cocron and his team offer their extensive experience. Schedule an appointment at www.ra-cocron.de.
This article is for general information purposes only and does not replace individual legal advice.
