Climbee
2018-12-20 18:06:42
- #1
We currently have quite a problem and unfortunately ended up with a totally incompetent notary, whose advice boils down to the statement "you have to discuss that with the tax advisor"; our tax advisor, in turn, rightly says: "tax law follows civil law."
The situation is as follows: my brother and I already own the plot of land on which our family house stands; in addition, my brother owns some extra land that effectively enlarges the shared plot.
We have now built our new house there. A new survey is already available, so the plot has been divided in such a way that our house is on one plot and the family house on the other.
The plot on which our house is now built should belong to me and partially to my husband.
Unfortunately, between siblings, there is only a tax exemption amount of €20,000 for gifts; my brother can also only make a tax-free gift to his brother-in-law up to exactly this €20,000. So, a total of €40,000.
However, for the entire plot to belong to us, my brother would have to transfer his entire share of this plot to us, which amounts to about €56,000 (price per sqm according to the land value; this may be used for a gift). So, €16,000 would have to be taxed with 15% gift tax (€2,400).
Our idea was now: my brother gifts my husband and me each square meters worth €20,000; the square meters that are not gifted this way would be sold to me in a regular purchase contract. Then valued at market value and not, as for a gift, according to the land value. This would then be normally taxed with real estate transfer tax (significantly less than gift tax; about €700).
So we would have two gifts (each amounting to €20,000 to me and my husband) and then a sale of the remaining square meters from my brother to me, then taxed with real estate transfer tax and priced per sqm according to the underlying market value.
Therefore, my question (which the notary cannot or will not answer even after repeated inquiries):
Is it possible to separate such a land transfer into a part "gift" and a part "sale"?
Can this be done in one deed or is it better to make two, or three deeds (once gift, or two gifts and once sale)?
Is this possibly feasible with a certain time interval; i.e., we do the gifts now and then either next year or later the rest is sold by my brother to me?
We would save about €1,400 in real estate transfer tax (for this part, there is still a second one), if we could use the gift exemption twice (once for me and once for my husband).
Is that legally possible? Can it be split like that into a gift and a sale?
For our tax advisor, the situation is like this: gift up to €20,000 no tax, sale taxed at 3.5%. Done. She finds this solution clever.
In return, my brother is also supposed to receive land from me, specifically from the plot on which the family house stands and which now belongs to us each in equal parts.
Here, the market value with house is used as the calculation basis (i.e., what we get for the land with the house divided by the sqm => gives the price per sqm).
Here, too, I would like to gift my brother the number of square meters that in total fall below the exemption amount.
To balance it out so that my brother suffers no disadvantage, I would then have to sell him a corresponding number of square meters; here again real estate transfer tax would be due.
The final situation should then be: the plot on which our new house stands belongs to my husband and me. The plot with the family house belongs to my brother in a larger share and to me in a smaller share.
It is okay for us to do this somewhat staggered in time; it should just be done within the next few years to achieve this final situation.
I have calculated everything, obtained prices accordingly, calculated the corresponding percentage shares of the plots, etc.
Now I have the draft from the notary and his comment: mutual gifts always constitute an exchange, therefore a pure exchange/transfer contract.
Exchange, says our tax advisor, is treated for tax purposes like a normal sale; i.e., taxed from the very first euro. We could not use the total exemption amount of €60,000 like this (meaning €2,100 real estate transfer tax that we would have to pay).
Again, the same question as above: can I split into a part gift and a part sale?
If mutual gifting always constitutes an exchange, can we approach this second part (i.e., me to my brother) simply with some time interval? It is not important to us to reach the cleanest solution as fast as possible; we are happy to do it step by step if that saves us around €2,100 in taxes (I think that is already a sum where one should consider how to solve it most favorably for tax purposes).
I want a legally and tax-wise clean solution, no question. But if there is a possibility to exploit the gift exemptions to which we are entitled, we would gladly do so.
We have overwhelmed our current notary with this. If he could at least explain the legal basis to me why only an exchange/transfer contract is possible here, as he has now presented it to us (by the way: after four consultation meetings, two of which he attended without preparation and without documents; therefore I am neither convinced by his professionalism nor by his commitment to find the best solution for us), we would simply have to accept it.
But I cannot quite believe that, and the research I have made so far with my modest legal knowledge suggests to me that there must be other solutions.
The annoying thing: we are slowly running out of time. My husband must be entered into the land register so that we get our financing (everything already fixed and signed, but the land register must be done). Furthermore, the land values for 2019 will be recalculated (and will certainly rise).
I get the impression that the notary is just presenting us the easiest and fastest solution for him. He doesn't care whether we pay over €2,000 more in taxes or not; he is paid according to the value to be certified anyway; whether he has found the most favorable solution for us is not important to him.
If I am now told: legally it cannot be done otherwise, it cannot be split into gift and sale, then okay, we have to swallow the bitter pill. But even our tax advisor believes there should be another solution.
Does anyone here have enough legal background to tell me: yes, go ahead, there is a solution! Then we would now do just one gift; my brother to my husband, so that he gets into the land register and the financing is finally completed. For the rest, we would then look for a more capable notary.
Or a clear statement: there is no other possibility; you cannot use the gift exemption like this, it is not legally clean.
I have not received this statement from our notary either; basically we have not heard anything from him about what is legally possible or not.
Sorry for the long sermon, but maybe someone here knows more than our notary or is willing to make a corresponding statement.
It may well be that this duck-under notary does know very well what would be cheapest for us, but that would mean more work for him and he would not get more for it because the value to be certified remains the same — I slowly suspect this (especially after the completely uninformative consultation appointments we have had so far).
The situation is as follows: my brother and I already own the plot of land on which our family house stands; in addition, my brother owns some extra land that effectively enlarges the shared plot.
We have now built our new house there. A new survey is already available, so the plot has been divided in such a way that our house is on one plot and the family house on the other.
The plot on which our house is now built should belong to me and partially to my husband.
Unfortunately, between siblings, there is only a tax exemption amount of €20,000 for gifts; my brother can also only make a tax-free gift to his brother-in-law up to exactly this €20,000. So, a total of €40,000.
However, for the entire plot to belong to us, my brother would have to transfer his entire share of this plot to us, which amounts to about €56,000 (price per sqm according to the land value; this may be used for a gift). So, €16,000 would have to be taxed with 15% gift tax (€2,400).
Our idea was now: my brother gifts my husband and me each square meters worth €20,000; the square meters that are not gifted this way would be sold to me in a regular purchase contract. Then valued at market value and not, as for a gift, according to the land value. This would then be normally taxed with real estate transfer tax (significantly less than gift tax; about €700).
So we would have two gifts (each amounting to €20,000 to me and my husband) and then a sale of the remaining square meters from my brother to me, then taxed with real estate transfer tax and priced per sqm according to the underlying market value.
Therefore, my question (which the notary cannot or will not answer even after repeated inquiries):
Is it possible to separate such a land transfer into a part "gift" and a part "sale"?
Can this be done in one deed or is it better to make two, or three deeds (once gift, or two gifts and once sale)?
Is this possibly feasible with a certain time interval; i.e., we do the gifts now and then either next year or later the rest is sold by my brother to me?
We would save about €1,400 in real estate transfer tax (for this part, there is still a second one), if we could use the gift exemption twice (once for me and once for my husband).
Is that legally possible? Can it be split like that into a gift and a sale?
For our tax advisor, the situation is like this: gift up to €20,000 no tax, sale taxed at 3.5%. Done. She finds this solution clever.
In return, my brother is also supposed to receive land from me, specifically from the plot on which the family house stands and which now belongs to us each in equal parts.
Here, the market value with house is used as the calculation basis (i.e., what we get for the land with the house divided by the sqm => gives the price per sqm).
Here, too, I would like to gift my brother the number of square meters that in total fall below the exemption amount.
To balance it out so that my brother suffers no disadvantage, I would then have to sell him a corresponding number of square meters; here again real estate transfer tax would be due.
The final situation should then be: the plot on which our new house stands belongs to my husband and me. The plot with the family house belongs to my brother in a larger share and to me in a smaller share.
It is okay for us to do this somewhat staggered in time; it should just be done within the next few years to achieve this final situation.
I have calculated everything, obtained prices accordingly, calculated the corresponding percentage shares of the plots, etc.
Now I have the draft from the notary and his comment: mutual gifts always constitute an exchange, therefore a pure exchange/transfer contract.
Exchange, says our tax advisor, is treated for tax purposes like a normal sale; i.e., taxed from the very first euro. We could not use the total exemption amount of €60,000 like this (meaning €2,100 real estate transfer tax that we would have to pay).
Again, the same question as above: can I split into a part gift and a part sale?
If mutual gifting always constitutes an exchange, can we approach this second part (i.e., me to my brother) simply with some time interval? It is not important to us to reach the cleanest solution as fast as possible; we are happy to do it step by step if that saves us around €2,100 in taxes (I think that is already a sum where one should consider how to solve it most favorably for tax purposes).
I want a legally and tax-wise clean solution, no question. But if there is a possibility to exploit the gift exemptions to which we are entitled, we would gladly do so.
We have overwhelmed our current notary with this. If he could at least explain the legal basis to me why only an exchange/transfer contract is possible here, as he has now presented it to us (by the way: after four consultation meetings, two of which he attended without preparation and without documents; therefore I am neither convinced by his professionalism nor by his commitment to find the best solution for us), we would simply have to accept it.
But I cannot quite believe that, and the research I have made so far with my modest legal knowledge suggests to me that there must be other solutions.
The annoying thing: we are slowly running out of time. My husband must be entered into the land register so that we get our financing (everything already fixed and signed, but the land register must be done). Furthermore, the land values for 2019 will be recalculated (and will certainly rise).
I get the impression that the notary is just presenting us the easiest and fastest solution for him. He doesn't care whether we pay over €2,000 more in taxes or not; he is paid according to the value to be certified anyway; whether he has found the most favorable solution for us is not important to him.
If I am now told: legally it cannot be done otherwise, it cannot be split into gift and sale, then okay, we have to swallow the bitter pill. But even our tax advisor believes there should be another solution.
Does anyone here have enough legal background to tell me: yes, go ahead, there is a solution! Then we would now do just one gift; my brother to my husband, so that he gets into the land register and the financing is finally completed. For the rest, we would then look for a more capable notary.
Or a clear statement: there is no other possibility; you cannot use the gift exemption like this, it is not legally clean.
I have not received this statement from our notary either; basically we have not heard anything from him about what is legally possible or not.
Sorry for the long sermon, but maybe someone here knows more than our notary or is willing to make a corresponding statement.
It may well be that this duck-under notary does know very well what would be cheapest for us, but that would mean more work for him and he would not get more for it because the value to be certified remains the same — I slowly suspect this (especially after the completely uninformative consultation appointments we have had so far).