Save money with real estate: give away your house now

An annual tax law isn't usually something that alarms the average German taxpayer.

A few adjustments are made, marginal tax relief alternates with small restrictions.

The draft for 2023, for example, lures with improvements for the operators of photovoltaic systems, with a savings allowance that has been raised to 1000 euros, with higher depreciation for real estate and the full possibility of deducting pension expenses.

At one point in the draft law, however, the Federal Ministry of Finance has hidden a real tax hammer.

Dyrk Scherff

Editor in the “Value” section of the Frankfurter Allgemeine Sunday newspaper.

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It scares homeowners and their families.

Because real estate should be valued differently from next year.

If no market data is available in the municipality concerned, the statutory assessment method is used.

This is more likely to be the case outside of the big cities.

The calculation factors used are now increased so that they are closer to the market.

The owners' association fears an increase of 20 to 30 percent, in individual cases significantly more.

That adds up to the increases in value over the past ten years, during which property prices have doubled in some cases.

This is relevant for all property heirs.

Because if the house or apartment is highly valued, the heir has to pay inheritance tax.

And that can be pretty intense.

Anyone who gets a house from their parents worth 500,000 euros in the future will pay 11,000 euros in taxes

.

Without the valuation change in the annual tax law, the inheritance would have been tax-free because the value would not have exceeded the allowance for children of 400,000 euros.

However, homeowners can often prevent taxes for the heirs: by giving away their property to the later heirs in advance, as a preferred inheritance, so to speak.

Married couples do not have to do this if they want to bequeath the family home they live in to one another.

Because such inheritances are always tax-free, regardless of the value.

In the other cases, however, donations bring an advantage compared to the alternative of only inheriting everything upon death.

They use the fact that the high tax allowances of up to 500,000 euros apply every ten years.

So if you transfer part of your assets early before your death and again after your death, you can let your family members benefit from the allowances several times.

This saves taxes and usually also prevents a property from having to be sold in order to be able to pay taxes with the proceeds.

The new regulation in the annual tax law has now made gifts of real estate at least more difficult.

There are several ways to give them away tax-free anyway.

Giving away this year

The higher rating only applies to donations from January onwards.

Those who can still realize them by the end of the year will still benefit from the old, cheaper valuation method.

For this, the donation must be dated for 2022 in the notarial purchase contract, but the entry in the land register may not be made until 2023.

The problem is getting a notary appointment and an appointment with a tax advisor, who hardly have any free time before the end of the year.