Donation of property to child and partner

Hello forum,

my partner and I want to build. The plot of land is located at my girlfriend's parental farm and is supposed to be given to us as a gift. We are not married.

Now, my girlfriend as a daughter has a tax exemption of 400,000 EUR. I, as a "third party" without any connection, have a tax exemption of 20,000 EUR (according to the internet. Correct?).

The plot is about 3,000 sqm in size and is located in an outer area. Current use is as farmland. The financing should be in both of our names in equal parts. As a counterpart to the gift, I am contributing equity.

How can we get the plot in both our names without paying taxes? At a land price of, let's say, 5 EUR per sqm, we come to a market value of 15,000 EUR before construction starts.

- Can the father gift us each half (value 7,500 EUR) in a contract?
- Can the value of the plot be challenged by the tax office and considered as building land? (3,000 sqm * 20 EUR building land price = 60,000 = 30,000 EUR per person = gift tax)?
- Can my girlfriend not receive any more gifts within the next 9 years or is the received gift only deducted?
- Does the plot first have to be gifted to my girlfriend and then to me? (chained gift?) or do I have to buy half of it? (real estate transfer tax)?

I hope a direct gift of half each is possible.

Can someone help me?

Your girlfriend should have the property gifted to her. I wouldn't go to great lengths for 15,000€.

BUT: is building even allowed on it? And what about the development? Have you thought about the costs?
The exemption amounts you mentioned are correct.

One final question: 3000 sqm? Have you already thought about the amount of work involved? Taxes? Pure costs for construction measures from the municipality?

Hello NZiege,

this is an extremely sensitive topic.

The exemption amounts you mentioned are correct, however, no one can tell you in advance how the tax office will assess the value of the gift.

I would recommend that you submit a binding advance inquiry to the responsible tax office and describe the project – with all details and honestly.
I would also involve a tax advisor in this.

Your girlfriend can of course receive further gifts (or inheritance, which is the same exemption amount) in the coming years; only the value of the current gift is taken into account.

If the tax office objects to the question of an immediate partial gift, you still have another interesting option, if you also plan to marry.

First transfer the property to your girlfriend now and only after you have built, married, and already live in the property can she then gift half of it back to you, without the gift tax exemption being affected. This admittedly somewhat macabre advantage has the effect that if your girlfriend dies within the next 10 years, you would still have the full inheritance tax exemption of EUR 500,000.00 (between spouses) available.

Best regards,

Dirk

The tax office’s response is then generally to be considered binding.

If my girlfriend then has it, I have nothing. Except debts. Please forgive me this unromantic view, but you never know what life will bring. Therefore, I also want to be included in the land register. When purchasing, real estate transfer tax applies. 500 EUR should not be a problem. But if the tax authorities later say that it should actually be considered as building land, I will face a significantly higher tax burden (which won't kill me, but if a simple gift to both is possible, it would be unnecessary).

The responsible clerk from the district office was already on site and gave us a "verbal commitment" (I know, that doesn't exist and is worth nothing). It is being applied for as a gap closure. Therefore, we expect approval. If it doesn't work out, we will build a retirement home. The parents run a full-time farm.

Development is secured. Wastewater via a three-chamber system. The costs are estimated and acceptable. We both know the amount of work involved. My girlfriend comes from the farm with corresponding land and garden, I grew up in similar dimensions. We are moving to the outskirts because we want to. And not into the housing estate. It is what we are looking for and also what we are willing to pay more money for.

Thank you very much Dirk.

I will then speak with my prospective father-in-law about this and ask his tax advisor. Thanks for the tip about the preliminary inquiry, I was not aware of this possibility!

If my girlfriend then has it, I have nothing. Except debts. One may forgive me this unromantic view, but you never know what life will bring. Therefore, I also want to be part of the GB.

I can understand that. Therefore, I would recommend you to put a few euros on the table here and present your planning to a notary – again, address all eventualities here. A clever notary should then be able to offer you a decent solution.

My first step would still be a binding preliminary inquiry to the tax office – maybe everything will then dissolve into thin air...