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Gift Inheritance Tax

In Germany for example, if the inheritance gift is worth more than 300,000, then it will be taxed at 40%. In some other countries the figure may vary according to local legislation. In the U.S, the gift and inheritance tax was introduced on any gifts acquired as from the 1st of April 1975. There is a thin line between inheritance and inheritance gift. While the former refers to any gratuitous benefits taken on some one' death, the later refers to any gratuitous benefits taken for any other reasons but death.

Inheritances in many cases are simply gifts passed on to the descendants by virtue of the owner having passed on. Since no money is paid for the value of the inheritance to cover its market value. As is the rule, the donor is always supposed to be the one to pay the tax. Taking into consideration the fact that the donor in this case is deceased, it is usually up to the state to determine under what category the gift should be classified.

Several factors will determine whether or not the inheritance gift should attract tax and from who. Such factors as the location of the inheritance gift and its value as well as the nature must be considered. A gift of inheritance that is based in a foreign country and whether it is in the form of real estate, property or just cash will attract different treatment from the tax authority. In some countries, there is a set value of which the inheritance must be worth before it can attract any tax. The case gets even more complex when the deceased owned the property in one country and resided in another.

In the U.S, the tax applicable on inheritance gifts is worked out by calculating the taxable value of the gift and determining whether it has exceeded the tax free threshold. If the threshold amount is nil then the tax is calculated at excess of 25%. The gift taxes applicable are further variable depending on the donor and the recipient. If the gifts are between two spouses or their children, the rates applicable will vary as opposed to cases where the donor and done are of different nationalities.

If the inheritance gift is of a dwelling house, most countries will not subject it to taxation or if they do, it is usually at minimal rates as compared to other market rates. Other exempt cases are those concerning gifts to certain charities and heritage properties. Some forms of insurances may also qualify.

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