The story of “gift tax” and “inheritance tax”
I’m sure you all know that the tax-exempt limit for gifts during one’s lifetime is up to 1.1 million yen per year, and many of you are already using this system to wisely transfer your property to your child’s name.
However, if the giver dies within three years of the gift, it will be added to the calculation of inheritance tax, so be careful (although it is troublesome to be warned).
If you were joking, “Mom, definitely do your best for another 3 years ~”, it seems that gift assets after January 2024 will be added to your inheritance until 7 years later?!
Are you going to chase them around and squeeze out taxes?
Regarding gift tax and inheritance tax, there is an opinion that it is double taxation.
Certainly, it is strange under what logic the property left over from paying income tax when income is obtained is taxed again, but Nantoka, an explanation that is completely incomprehensible to the layman is made that “income tax and inheritance tax are taxes of different dimensions, so they are not double”.
By the way, the tax-exempt limit of 1.1 million yen is only the limit of the recipient, and for example, 1.1 million yen is not deducted from both parents for one child, for a total of 2.2 million yen.
And if a gift exceeding 1.1 million yen is made, even if you have paid the taxable gift tax properly at that time, unless you declare it yourself when the inheritance occurs, you may be subject to inheritance tax again.
If you have the energy to chase for seven years, I want you to be aware of the taxes you have paid.
By the way, even if you decide to give 1.1 million yen every year, if the tax office notices it, it will be considered “just dividing the high-value gift” and may be taxed, so it is safer to change the method and time of giving each time.
There are several other ways to give gifts during life.
For example, you may have prepared an account in the name of your children or grandchildren and put a large amount of money into it.
The caveat to this is that you will always be in charge of managing the account. If the person does not know the existence of the account, or if the passbook or seal remains in the hands of the giver, it will be subject to taxation at the time of inheritance.
It is also an effective measure to designate a child as the beneficiary of life insurance that pays a lump sum premium.
Life insurance benefits are not counted as inherited assets as they are considered the beneficiary’s inherent property.
In other words, it does not fall into the basic deduction amount of inheritance assets (30 million yen + 6 million yen x number of legal heirs).
Separately, up to 5 million yen per legal heir is exempt from taxation, so you can reduce the taxable object.
In addition, if you give a lump sum gift as “educational funds” to a child, grandchild, or great-grandchild under the age of 30, there is a system that exempts up to 15 million yen from taxation, but in order to use this, you must also sign a contract with the handling financial institution and prove that the money was used for the target educational purpose.
Also, please note that if the person who received the gift is over 30 years old, the amount remaining at that time will be taxed.
This system is limited to limited products (?) until March 2026. It seems to be.
What to do with the property is the responsibility of the person who leaves it, and if it is not properly organized and decided, the children and grandchildren who will succeed will be in trouble.
In order to reduce inheritance tax, it is a good idea to reduce the amount remaining as much as possible by dividing it little by little from now on, such as dividing it among children, but if you do it wrong, the effect will be lost.
It is necessary to look at the whole picture and think carefully and proceed systematically.
The taxation rules issued by the National Tax Agency are too complicated in language and mechanism, and it is difficult to understand them accurately (although it can be perceived that they are trying to fall into a trap…), but we cannot afford to lose.
You have to study hard, keep the amount of taxation as low as possible, and protect your precious assets.
For the time being, why don’t you think about it with the intention of making a 10-year plan, rather than “it’s still early”.
By Admin|2023-07-28|2023,News Release|