If you donate or leave someone money, the recipient often has to pay tax on the gift or inheritance. Still, if you approach gifting and failing smartly, you can save a lot on taxes.
Smart donations and omissions – Up to which amount tax-free?
The table below shows the rates for gift tax and inheritance tax. You also immediately see the amount up to which you can donate or leave tax-free. Wi9th the Prepaid Gift Card you can expect a proper solution now.
You can start with smart donations when your child is just born. If, as a parent, you save annually in a savings account in the name of your child, you can use the exemption every year. In theory, your child could have an amount of 18 times 5,428 euros = 97,704 euros on his or her 18th birthday without having to pay gift tax on this.
This exemption also applies if your child is older than 18. So if you want to make a smart gift to your child (or to others), it is best to spread the gift over several years, so that the gift falls under the exemption several times.
Smart donation with a large gift
If you still want to make a large donation, you can do this once within an increased exemption. Parents can donate a one-off tax-free amount of 26,040 euros to their child between the ages of 18 and 40. The exemption even amounts to 54,246 euros if the money goes to an expensive study. If this age has passed, but the recipient’s partner is younger than 40, the exemption also applies.
Smart donation and failure to plan
An important reason for parents to donate to the children is to prevent the children from paying a lot of inheritance tax. Or to reduce equity, so that they themselves have to pay less capital gains tax.
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When it comes to reducing the inheritance tax, it is important to plan the estate well. You can use the exemption every year. In this way you already transfer a large part of your assets tax-free to the children. Please note that donations still fall under the estate six months before the donor’s death.
Tip! Do you want to decide for yourself who inherits which part of the estate? Then call in a notary to draw up a will. Here you can specify exactly what the distribution should look like.
Cleverly leaving and donating a house
For many people a large part of the assets are in their own home. That is why parents sometimes wonder if it is cheaper to donate the house to the children when they live. Often this is not the case. The children have to pay a number of things, such as transfer tax. Moreover, if the children do not live in the house, the house falls under their own assets and they must pay an annual capital gains tax on this. In addition, the exemption for an inheritance is higher than the exemption for a donation.