What is the allowance for inheritance tax?
March 5, 2023 | 50,00 EUR | answered by Ella König
Dear tax advisor,
I recently received an inheritance and am concerned about the inheritance tax that I may have to pay. As I do not have a lot of financial resources, I am worried that the tax burden could be too high and could lead me into financial difficulties.
My inheritance consists of various assets, including cash, real estate, and some valuables. I am unsure about the inheritance tax threshold and whether I may exceed it. It is important to me to properly declare everything and avoid any issues with the tax authorities.
So my question to you is: What is the inheritance tax threshold and how can I ensure that I properly declare my inheritance without getting into financial difficulties? Are there ways to minimize the tax burden or maximize the threshold to save on taxes?
I thank you in advance for your support and guidance on this matter.
Sincerely,
Hildegard Halbscheffel
Dear Mrs. Halbscheffel,
Thank you for your inquiry regarding inheritance tax. I understand your concerns and would like to help you clarify this matter.
The tax-free allowance for inheritance tax depends on your relationship to the deceased. For spouses or registered civil partners, the tax-free allowance is currently €500,000. For children and stepchildren, the tax-free allowance is €400,000, and for grandchildren, it is €200,000. For other relatives such as siblings or nieces/nephews, the tax-free allowance is €20,000, and for all other heirs, it is also €20,000.
If the value of your inheritance exceeds the tax-free allowance, you will have to pay inheritance tax. The tax rates increase progressively and range from 7% to 50%, depending on the value of the inheritance and your relationship to the deceased.
To ensure that you correctly pay taxes on your inheritance and avoid financial difficulties, I recommend consulting a tax advisor. An experienced expert can help you gather all relevant information, assess your inheritance correctly, and take advantage of potential tax benefits.
There are indeed ways to minimize the tax burden or maximize the tax-free allowance to save on taxes. These include lifetime gifts, maximizing tax-free allowances, annuity payments, or setting up tax-optimized wills.
It is important to address the issue of inheritance tax early on and seek professional advice to take advantage of potential tax-saving opportunities and avoid financial problems.
I hope this information has been helpful to you, and I am available to answer any further questions you may have.
Best regards,
Ella König
Tax Advisor
