Isn't it tax measures to be worried about if you own real estate?Inheritance tax is generally reduced, but in some cases, it is possible to choose a lifetime gift.
If you are likely to inherit from now on, let's check everything from the basic knowledge of living gifts to notes.
table of contents
What is a lifetime gift?
Lifetime gifts are often used as inheritance tax measures between relatives, and tax is imposed by giving property from one individual to another without charge.
There are two systems of gift tax: calendar-year taxation and taxation for liquidation at the time of inheritance, and the inheritor is obligated to pay the tax.
For calendar year taxation, if the total amount for that year exceeds the basic exemption of 110 yen, gift tax will be imposed.In addition to the 110 million yen, a spousal deduction of 2,000 million yen is available for spouses.
Settlement tax at the time of inheritance is applied when certain requirements are met, and is a method of paying tax at the time of inheritance. No tax is applied up to 2,500 million yen, and 20% tax is incurred beyond that.
Since the gift tax is often higher than the inheritance tax, it is important to do so within the range where the gift tax does not apply.At first glance, taxation for liquidation at the time of inheritance may seem highly advantageous, but as a result, the tax is levied at the time of inheritance, so it is hardly a tax saving measure.
In addition, if you die within 3 years, it will not be a gift, but it will be calculated for inheritance tax, so it will not be effective.
Related article:Will real estate investment for inheritance tax increase the taxable amount?Understand how taxes work so you don't fail
Lifetime gift tax
There are gift tax, real estate acquisition tax, and registration license tax.
Gift tax and inheritance tax have different tax rates, so it is necessary to investigate which is more advantageous.
Gift tax
General gift tax rate
* In the case of gifts between siblings, gifts between husband and wife, and gifts from parents to children.
Taxable price after basic deduction
- 200% tax rate for 10 million yen or less, no deduction
- Tax rate is 300% for 15 million yen or less, deduction is 10 yen
- Tax rate is 400% for 20 million yen or less, deduction is 25 yen
- Tax rate is 600% for 30 million yen or less, deduction is 65 yen
- Tax rate is 1,000% for 40 million yen or less, deduction is 125 yen
- Tax rate is 1,500% for 45 million yen or less, deduction is 175 yen
- Tax rate is 3,000% for 50 million yen or less, deduction is 250 yen
- Over 3,000 million yen tax rate 55%, deduction is 400 million yen
reference:National Tax Agency Gift tax calculation and tax rate (calendar year taxation)
When applicable for special gift property
*This includes gifts from lineal ascendants (grandparents, parents, etc.) to persons aged 1 or older as of January 1 of the year (children, grandchildren, etc.), gifts from grandfathers to adult grandchildren, and gifts from parents to adult children. It hits.
- 200% tax rate for 10 million yen or less, no deduction
- Tax rate is 400% for 15 million yen or less, deduction is 10 yen
- Tax rate is 600% for 20 million yen or less, deduction is 30 yen
- Tax rate is 1,000% for 30 million yen or less, deduction is 90 yen
- Tax rate is 1,500% for 40 million yen or less, deduction is 190 yen
- Tax rate is 3,000% for 45 million yen or less, deduction is 265 yen
- Tax rate is 4,500% for 50 million yen or less, deduction is 415 yen
- Over 4,500 million yen tax rate 55%, deduction is 640 million yen
reference:National Tax Agency Gift tax calculation and tax rate (calendar year taxation)
inheritance tax
Acquisition amount corresponding to legal inheritance
- 1,000 million yen or less tax rate 10%, no deduction
- 3,000 million yen or less tax rate 15%, deduction is 50 yen
- 5,000 million yen or less tax rate 20%, deduction is 200 yen
- 1 million yen or less tax rate 30%, deduction amount is 700 million yen
- 2 million yen or less tax rate 40%, deduction amount is 1,700 million yen
- 3 million yen or less tax rate 45%, deduction amount is 2,700 million yen
- 6 million yen or less tax rate 50%, deduction amount 4,200 million yen Over 6 million yen tax rate 55%, deduction amount 7,200 million yen
reference:National Tax Agency Inheritance tax rate
You can choose from two taxation methods for gift tax: calendar year taxation and settlement taxation at the time of inheritance.
Calendar-year taxation is imposed on the total amount of gifts received from one donor for one year after deducting the basic exemption of 1 million yen.Also, in the case of direct ancestors such as parents and grandparents, special gift property is applied, and the tax rate is lower and the deduction amount is higher.
Taxation for settlement at the time of inheritance is a gift tax system that can be selected when property is donated by parents or grandparents aged 60 or over to children or grandchildren aged 20 or over.A special deduction of up to 1 million yen is applied to each donor, and a uniform gift tax of 2,500% is imposed on the remaining amount.In this case, it has the effect of suppressing the gift tax, but it is necessary to be careful because if the special deduction is applied, it will be liquidated as an inheritance tax at the time of inheritance.
In addition, in the case of a gift from a spouse, if the marriage has been married for 20 years or more and the gift is for residential real estate or money for acquiring residential real estate, in addition to the basic deduction of 110 million yen There is also a special case where you can deduct up to 2,000 million yen.This also has the same effect as taxation for settlement at the time of inheritance, but it has the effect of suppressing gift tax, but it is necessary to be careful that it does not reduce inheritance tax.
Real estate acquisition tax
This tax is levied on acquisition of real estate regardless of whether it is registered or not.
The amount of real estate acquisition tax is calculated by multiplying the standard taxable amount by the tax rate.As a general rule, the fixed asset tax assessment value is applied as the standard taxable amount, which is usually lower than the market value, about 7% of the market value for land and about 5 to 6% for buildings.
Registration license tax
This tax is paid during the procedure for recording and publicizing the ownership of land and buildings in the register of the Legal Affairs Bureau.
The tax rate varies depending on the type of registration, and is 2.0% for land ownership transfer registration and ownership transfer registration for second-hand houses.In addition to this, you will also need to pay the tax accountant who handles the procedure.
Flow of lifetime gifts of real estate
Preparation of real estate gift contract
A gift contract can be concluded even if it is a verbal promise if there is an agreement between the donor and the recipient, but it is common to prepare documents to objectively prove that there was a contract.
There is no fixed format for the document, but it is necessary to describe all five items: when, to whom, what, conditions for gifting, and method of gifting.
Also, unlike cash and stocks, in the case of real estate, a revenue stamp is required on the gift contract.A revenue stamp of 200 yen is affixed to the real estate transfer contract as it is subject to stamp duty.
Since there are expenses such as registration and registration license tax for the inter vivos gift of real estate, it is also necessary to clearly state who will bear these costs.Please also remember that once a gift contract is created, it cannot be revoked according to Article 550 of the Civil Code.
Apply for registration at the Legal Affairs Bureau
Change the name at the legal affairs bureau that has jurisdiction over the donated real estate.
It is necessary to prepare the following documents, and asking a specialist such as a judicial scrivener is also a point to reduce the burden.
- Notification of registration identification information of the target real estate (registered title)
- Seal certificate of the donor (within XNUMX months)
- Certificate of residence of the beneficiary
- fixed asset appraisal certificate
- Real Estate Donation Agreement (Proof of Registration Cause Information)
- registration application
gift tax return
If the price of the land exceeds 110 million yen per year, the taxpayer himself/herself must calculate the tax, apply to the tax office and pay the tax.
The tax rate of the gift tax is very high, and if it exceeds 3000 million yen, it will be taxed as much as 55%.
Precautions to be taken when saving tax on lifetime gifts
If you want to use lifetime gifts as tax savings, it is best to choose calendar year taxation and donate 1 million yen per year, which is not subject to gift tax.
However, in the first place, the gift tax is established so that assets are not transferred during life for the purpose of avoiding inheritance tax.
It would be troublesome to tax every time a gift is given, so the system does not impose tax up to 110 million yen. If you continue to do it and it is considered a regular gift, you may eventually be taxed on the total amount.
Originally, it is not allowed to use it as a tax countermeasure for inheritance tax, and if you repeat the gift every year, it will be considered that you have the gift intention of 1,000 million yen from the beginning, so if you use this system repeatedly every year, you need to be careful.
In addition, gift tax is reduced for children under the age of 30 and grandchildren's educational funds.Gifts from direct ascendants such as grandparents are exempt from gift tax up to 1,500 million yen.
Furthermore, up to 20 million yen is tax-free for gifts to children and grandchildren between the ages of 50 and 1,000 for marriage, moving, and childbirth expenses.
In order to be exempt from gift tax, the donor must complete procedures at a financial institution.Submit a tax exemption form at the bank and have it submitted to the director of the tax office with jurisdiction over the place of tax payment via the bank.
In order to withdraw this amount, you must submit documents to the bank that prove your education funds, marriage funds, etc.
If you are trying to use lifetime gifts for tax saving measures, you can basically only do up to 1 million yen per year.Therefore, the more people you have, the more tax savings you can use.
However, the gift tax is originally meant to prevent inheritance tax avoidance, so if you wish to donate a large amount and continue for 10 or 20 years, it will be a regular gift, and as a result, the total amount of the gift tax will be imposed.
If you wish to make a gift of a certain amount or more, there are ways to use gifts such as educational funds that are not subject to gift tax, so if you are thinking about tax measures, consider these methods.
Summary
Taxes on lifetime gifts include gift tax, real estate acquisition tax, and registration and license tax.In addition, the taxation method of gift tax can be selected from calendar year taxation and settlement taxation at the time of inheritance.
If you choose calendar year taxation and donate 1 yen per year, which is not subject to gift tax, it may be considered a regular gift, so be careful.
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