Division of the estate

Division of the estate

"My mother died a few years ago. She left us ownership of a number of buildings. My sister, my father and I will soon be undertaking some work that will increase the value of these properties. I'm wondering whether, from a tax point of view, we should apply for a division of the estate before or after taking these steps. My question is as follows: when an estate is divided, is the value of the estate taken into account at the time of death or at the time of the application for division? Moreover, isn't it too late to do so?

Julien, Versoix.

The division of the estate is governed by articles 602 to 640 of the Civil Code.

In the case of buildings, the value to be taken into account is their market value at the time of the division.

The right to request partition is not subject to any statute of limitations. There is no time limit for exercising this right. So it's not too late to apply for partition; you can also do it later if that suits you better.

It is from a tax point of view that we need to ask ourselves when is the right time to apply for the division. Federal and cantonal tax laws can help.

Under federal law, each heir adds his share of the inherited income to his own taxable income. Each of you therefore currently pays tax on his or her share of the profits from the properties. If you increase the value of the property, you will earn more from it and pay more tax.

Devolutions of assets following an inheritance are exempt from tax. You are not taxed on the share of the estate that you receive.

From a cantonal point of view, you are taxed on the value of the property you own. On the other hand, property gains from an inheritance are exempt.

It would therefore be preferable for you to apply for the division of the estate now. If you do so after the increase in value, you will be taxed on the increased value of the real estate until the division, which will result in a higher gain under federal and cantonal law.

Before doing anything, you should seek the advice of an expert in the field.