Question to an expert
Am I obliged to pay inheritance tax on a property right away?
Upon death, heirs or legatees have six months (one year in the event of death abroad) to pay inheritance tax. A difficult deadline to keep when you essentially inherit “illiquid” assets, especially real estate.
However, when heirs collect property not in full ownership, but in bare ownership only (if the surviving spouse of the deceased, for example, retains the usufruct), the payment of rights may be deferred.
They will then be due no later than six months after the combination of the usufruct and the bare ownership (for example on the death of the usufructuary spouse) or the sale of the property. During the deferred payment, the tax authorities grant a credit to the heirs.
Annual interest: 1.2%
They have two options. The first: pay, in the long term, the inheritance tax calculated on the bare ownership, after having paid, each year of deferral, an interest, calculated on the inheritance tax (1.2% for a request in 2022).
Another possibility: pay, at the end of the deferment, inheritance tax calculated as if they had collected full ownership. This increases the rights, because the taxable value is then not reduced by the tax valuation of the usufruct. But it can be interesting if the death of the usufructuary occurs many years later and the property has increased in value. Here, no interest is due to the Treasury.
The administration will ask for a guarantee – most often a mortgage on real estate from the estate.