House: buy or inherit?
House: buy or inherit?
"I'd like to buy my father's property in the canton of Vaud. Is it more advantageous for me to buy it for a symbolic CHF 1 before he dies, or to wait until I inherit it?
Samy, Gland
From a tax point of view, cantonal inheritance and gift tax will apply in both cases. If you buy your father's villa for a symbolic sum, the purchase will be considered a gift because the price of 1 franc is very unlikely to correspond to the value of the property in question. Furthermore, if you inherit this property, you will have to pay inheritance tax. However, under the Vaud law on transfer tax on property transfers and inheritance and gift tax (LMSD), the inheritance and gift tax rate is the same under Vaud law.
However, there is a difference between the two cases in terms of the amount exempted. Gift tax is not levied on gifts of less than CHF 50,000 per child in the direct line per year. It should be noted that each parent can make a gift to the children. Above this threshold, tax is levied without exemption. As far as inheritance tax is concerned, you can deduct CHF 250,000 from your tax bill as long as your share of the estate does not exceed CHF 251,000. If your share reaches CHF 251,000, the exemption will be applied at a decreasing rate up to CHF 500,000. Beyond that, you will pay tax on the total amount of the estate.
It should be noted that the applicable rules are different in the canton of Geneva, where no tax would be levied by virtue of the law on registration duties and the law on inheritance duties, which exempt from tax in that canton gifts and inheritances that accrue to relatives in the direct line. It should also be noted that, in both cases, the encumbrances on the property, in particular the mortgages, will of course be transferred to you at the same time as its ownership.
