Beijing: Will inheritance tax be officially levied in this year? How to correctly avoid inheritance tax

It is reported that this is no longer Jack Ma buying a house in Hong Kong. It is reported that inheritance tax will be officially levied this year. Therefore, netizens say that Jack Ma frequently buys houses in Hong Kong to avoid inheritance tax. So how can we avoid inheritance tax and preserve our assets?

Definition of inheritance tax:

Inheritance tax is a tax levied by a country or region on the estate left by the deceased. It is sometimes called death tax abroad. The original intention of levying inheritance tax is to prevent the excessive disparity between rich and poor through the regulation of inheritance and donated property.

Inheritance tax is a tax levied on the property acquired after the death of the deceased and is levied on the heirs and legatees of the estate.

Inheritance tax collection standards:

According to the "Interim Regulations on Inheritance Tax (Draft)" promulgated in September 2004, the inheritance subject to inheritance tax in my country includes all the assets of the deceased at the time of death. Property and gifts of property made within five years before death. The inheritance tax exemption amount is 200,000 yuan, and the upper inheritance tax rate is 50%.

According to the situation of Shenzhen’s pilot program for preliminarily levying inheritance tax in my country:

The total assets (800,000-2 million), the tax amount is 20% of the assets, minus 50,000 (for example, For the total assets of 1 million, the inheritance tax levied is: 1 million * 20%-50,000 = 150,000);

For the total assets (above 10 million), the tax amount is 50% of the assets minus the deduction of 1.75 million (For example, the total assets of 15 million, the corresponding tax is: 15 million * 50%-1.75 million = 5.75 million).

The inheritance tax must be paid in cash within 3 months, otherwise it will be confiscated or auctioned.

It can be seen from the policies implemented in Shenzhen’s pilot program that wealth has increased 15 times, but inheritance taxes have increased 38 times. The key is that the inheritance tax must be paid in cash within 3 months, otherwise it will be confiscated or auctioned. Nowadays, a house is worth millions, so inheritance tax is closely related to each of our families.

Inheritance tax should be noted:

1. The tax paid must be the legitimate income of the child, excluding the property of the parents, let alone cash gifts from the parents.

2. The inheritance needs to be frozen before paying taxes.

Gifts within 3.5 years are equivalent to inheritance and subject to the same taxes.

4. Inheritance tax exemption: jewelry, cultural relics. However, if the children liquidate the property, inheritance tax will be owed. Legal donations are not included in the total estate.

5. Life insurance is not included in the total estate.

So according to these precautions, how can we protect our property?

How to correctly avoid inheritance tax?

Tax-exempt places: It is understood that there are currently 114 countries and regions around the world that levy inheritance tax. Many capable wealthy people will choose to allocate assets in vast non-taxed/low-taxed areas.

Immigration: This is very similar to the method above, but more thorough. You know, the starting point for personal estate tax in the United States is US$5 million, and the tax is only 35%. For many wealthy families, immigration is a good way to reduce the inheritance tax burden.

Buying insurance: If we don’t escape, what should we do? It is worth noting that the above-mentioned "Draft" stipulates that the insurance money obtained by the deceased from purchasing life insurance can be exempted from inheritance tax.

If the regulations remain unchanged, life insurance will be a good way to save taxes (this is also internationally accepted). Moreover, insurance is a legal asset that belongs exclusively to individuals. In addition to being tax-free, it cannot be divided even if the couple divorces.

Transfer to a trust: Currently, many high-net-worth individuals will consider family trusts to avoid inheritance taxes. What is transferred to the trust can be real estate or equity.

However, due to the current high tax burden in the process of transferring real estate to a trust in China (probably involving 5% business tax, 20% personal income tax, 5% land tax, 3% deed tax, and 0.05% stamp tax). ..), so equity will be a relatively low-tax method, but the process of transferring some equity to a trust will also involve business tax (if a company buys and sells the equity of a listed company, business tax will be levied, but there is no need for individual transactions) .

The introduction of inheritance tax may become an atomic bomb that impacts China’s real estate market. Suppose you plan to leave a house to your son, but your child will have to pay nearly half of the estate tax when inheriting the house. You will still have Want to buy a house? If you inherit the house to your child now, does he have the mentality and ability to deal with the property? Or what if he is not filial? In the future, how to correctly avoid inheritance tax will become a rigid requirement in the future. Everyone needs to learn and master the methods to avoid inheritance tax to help them maximize their asset preservation.