Financial Burden of Inheritance Tax: Managing Inherited Property and Minimizing Costs

Inheritance tax can be a significant financial burden for many, particularly when dealing with immovable property that cannot be easily sold. According to a survey conducted by Lähi-Tapiola, over half of Finns have received or expect to receive an inheritance that requires payment of inheritance tax. The tax is due on inheritances worth 20,000 euros or more.

For some heirs, paying the inheritance tax may require taking out a loan. In fact, nearly one in ten respondents to the survey reported that they had to or planned to take out a loan to cover the costs. Selling property or using their own savings were also common methods used to pay the tax. However, in situations where the inheritance includes immovable property that cannot be sold, such as a shared apartment where one party remains living, heirs may face severe financial challenges. They may need to sell their own assets or take on debt to cover the tax owed.

Unpaid inheritance taxes are becoming more common as more people are receiving and paying them. Last year, nearly eight million euros in inheritance taxes were subject to enforcement, compared to four million euros in 2019. The number of people paying inheritance tax has also risen, with an average tax payment of about 10,000 euros.

While recent reforms have extended the payment period for inheritance taxes, many may still struggle with high interest rates on unpaid taxes. Despite this longer payment period, the potential costs of interest may outweigh any benefits for those struggling to pay the tax.

Overall, it is crucial for heirs and executors of estates to carefully plan and budget for any potential inheritance taxes they may owe. Taking proactive measures such as selling assets before passing them down can help mitigate financial burdens later on.

In conclusion, while there are ways for heirs and executors of estates to manage inherited property and minimize costs associated with it