Passing on property during your lifetime: planning inheritance, saving tax and keeping family peace

Anyone who wishes to pass on their property during their lifetime by way of a transfer can save tax, avoid family disputes and secure their own retirement.

Why wait until death to pass on your property? An early transfer offers considerable tax advantages and creates clear arrangements. Planning the handover of a property in good time is a decisive step for the financial future of everyone involved. It is about far more than mere material value – it is about family harmony, security and ageing with dignity.

Making use of tax advantages and transferring assets optimally

Transferring a property during one's lifetime is, in legal terms, a gift. Settling the administration of one's estate early in this way offers considerable tax advantages. Children can benefit from generous allowances on gift tax. Per child, 400,000 euros are tax-free, and this allowance can be used afresh every ten years. Spouses even enjoy an allowance of 500,000 euros, while grandchildren can receive 200,000 euros (or 400,000 euros if their own parents have already died) tax-free.

The current market situation makes this consideration particularly relevant. Property prices have risen sharply in recent years, with the result that the allowances often no longer suffice in the event of inheritance. A staggered transfer during one's lifetime can therefore be a clever strategy for minimising the tax burden.

Which tax allowances can be used?

• Spouses: 500,000 euros
• Children: 400,000 euros (renewable every 10 years)
• Grandchildren: 200,000 euros
• Siblings/unmarried couples: 20,000 euros

Important to know: inheritance tax is calculated on the basis of the property's current market value. Since the change introduced by the 2023 Annual Tax Act, property valuations may turn out higher, which can lead to an increased tax burden. Early planning is therefore all the more important.

Do not forget your own security

For all this generosity, your own security should not be lost from sight. The usufruct offers an elegant solution here. A usufruct makes it possible to transfer the property during one's lifetime while retaining a lifelong right of use. Alongside the right of residence, this can also include the right to let the property. The value of the usufruct is deducted from the value of the house, thereby reducing the taxable amount of the gift – a twofold advantage.

A notarised transfer agreement should therefore contain clear provisions on the usufruct or right of residence. This provides security and prevents later conflicts. The agreement can additionally include provisions for the event of long-term care needs or other unforeseen situations.

Taking emotional aspects into account and preserving family harmony

The transfer of property is not only a legal and financial matter but also an emotional one. Properties often carry personal stories and memories within them. These emotional bonds can give rise to differing expectations. Open communication is therefore essential. Early conversations with all potential heirs help to clarify expectations and avoid misunderstandings.

Legal certainty through professional guidance

Handing over a house during one's lifetime necessarily requires a notary, since transfers of real property must be notarised. It is advisable to have the agreement drafted in advance by a specialist lawyer and to be accompanied to the notary appointment.

Professional support for your individual solution

As an experienced estate agent in Munich, Lainer & v. Anhalt Immobilien GmbH offers not only support with the sale of properties but also comprehensive advice on inheritance solutions. With a network of tax advisers, lawyers and notaries, individual solutions can be developed that take into account both the tax-related and the emotional aspects of a property handover.