Inheritances and inheritance taxes

Everyone who inherits must pay taxes on it. Exactly how much you have to pay depends on the value of the inherited goods. And as an heir you will have to determine that value yourself. You cannot know in advance what you are getting into.

Mandatory declaration

In the case of an inheritance, you must report this to the government within 5 months after death. This is done via an inheritance declaration. In the declaration form you state exactly what you inherited and what the net value is of all the goods separately. This is the estimated value on the day of death and after deduction of all debts. The estate tax collector will use this return to determine how much taxes you owe on the estate. If the recipient does not agree with the values specified, he will check your rating afterwards. Of course, this does not only concern homes and land. But also cars, clothing, stamp collections, works of art, etc.

The venal value

If a home or other property has to be sold after death, the sales price is of course also the value to be stated. Only the net amount is eligible. Any VAT, notary costs or other debts or taxes to be paid may therefore be omitted. This value is called the venal value and is the net value that the market would give in a public or private sale. But this value is of course always subjective and above all impossible to determine exactly. The seller will mainly try to work with points of comparison. Cars of a certain make and year almost all have the same value. The value of shares is determined by the closing price on the day of death. In the case of real estate, he will check what the sales price was of similar properties in the area and in the same period. The value of works of art, jewelry or other valuable objects is much more difficult to determine. After the 5-month tax return period, it is impossible to make adjustments to your tax return or reclaim amounts if it later turns out that you have overestimated a certain item. It is therefore in your interest to carefully consider whether you are going to sell a home immediately after death or whether it is better to wait more than 2 years. The recipient can revise his estimate up to 2 years after submission. On the other hand, you run the risk of underestimating the goods.

The right price

If the recipient decides that you estimate a deficit, you will have to pay additional inheritance tax on the deficit. In addition, you risk a tax penalty. For real estate, this penalty is equal to once the amount of inheritance tax on the deficit. As long as the undervaluation is less than one-eighth of the declared value, no additional inheritance tax is due. For movable property, the fine is equal to twice the amount of inheritance tax that you have underpaid. This fine is due from the first euro of inheritance tax that you paid too little. The trick is therefore not to estimate too much, but also not to estimate too little. You will always be able to defend your estimate, which can then lead to an amicable agreement. If an agreement cannot be reached, an audit estimate is made. However, this audit estimate only applies to immovable property. There are some exceptions, such as boats. The auditor’s opinion during the audit estimate is final. You therefore have every advantage by first reaching a good amicable agreement.

Preliminary estimate

For goods that are difficult to estimate, you can first request a prior estimate by registered letter. You will have to pay for this estimate yourself and there will be at least 1 expert for each party. If these experts cannot reach an agreement, the decision will have to be made by a justice of the peace. You then no longer have a hand in the estimate and the expert’s value is binding, even if the good is sold much cheaper within 5 months. It goes without saying that such a prior estimate is only interesting for a large taxable asset that is taxed at the highest rates. You can also hire a real estate appraiser yourself to help you determine the value of real estate. However, the recipient is not obliged to respect the judgment of this estimator.

The usufruct

Finally, you must take the usufruct into account. Children who inherit from their deceased father together with their mother only inherit the bare ownership of the family home. In that case, the children only have to declare the value of the bare property. You obtain this value by deducting the value of the usufruct from the sales value. The value of the usufruct is determined at a fixed rate of 4% of the value of the fully owned property. You must then multiply that 4% by the coefficient based on the age of the usufructuary. If the usufructuary is still young, life expectancies are higher and therefore also the value of the usufruct.