Big increase in real estate gifts

Big increase in real estate gifts

9th February 2016, Comments 0 comments

Since the Flemish Government reduced the tax rate on real estate given away as a gift the number of such gifts has tripled.

A growing number of Flemings are transferring the ownership of their houses and flats to their benefactors in order to before their death.

Inheritance tax payable by those that are the spouse, children, (great) grandchildren parents or grandparents of the deceased pay 3% inheritance tax on the first 50,000 euro of the estate, 9% of the sum between 50,000 and 250,000 euro and 27% inheritance tax above 250,000 euro.

This means that someone inheriting a house worth 350,000 euro would have to pay 33,000 euro in inheritance tax. However, if the same property were to be given as a gift between direct blood relatives or partners 3% is payable on the first 150,000 euro; 9% on the sum between 150,000 and 250,000 euro and 27% on anything between 250,000 and 450,000 euro.

This means that for a house worth 350,000 euro you pay 30,500 euro in tax rather than 33,000. For a house or flat worth 200,000 euro the difference is even greater: 9,000 rather than 18,000 euro. There is an even great difference for those that give away their real estate to friends or more distant relatives.

Since the new rules were brought in the number of gifts of real estate has tripled. The big increase in real estate gifts is proving to be a financial godsend for the Flemish Exchequer. 

The Flemish Finance Minister Annemie Turtelboom (liberal) told VRT News that "People like to give their house or flat away while they are still living. This helps evert family disputes after their death. What is important here is that lowering the rate of tax will serve to increase income for the Exchequer.”

 

Flandersnews.be / Expatica

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