Paying inheritance tax can be a significant financial burden, especially when dealing with immovable property that is difficult to sell. A survey conducted by Lähi-Tapiola revealed that many Finns struggle to pay the inheritance tax they owe. Half of the respondents said they had either received or expected to receive an inheritance worth more than 20,000 euros, which required payment of inheritance tax.
For some, taking out a loan was necessary to cover the costs of inheritance tax. Nearly one in ten respondents reported that they had to or planned to take out a loan to pay the tax. Selling property or using their own savings were also common methods used by heirs to cover the costs.
However, in situations where the inheritance includes immovable property that cannot be sold, such as a shared apartment where one party remains living, heirs can face severe financial challenges. The inability to sell the property can force heirs to sell their own assets or take on debt to cover the tax owed.
The Tax Administration has seen an increase in unpaid inheritance taxes that end up in foreclosure. 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. Despite recent reforms that extended the payment period for inheritance taxes, high interest rates on unpaid taxes may deter many from using this option.
In conclusion, paying inheritance tax can be a significant financial burden for many individuals and families. However, with careful planning and proper financial management strategies, it is possible for heirs to navigate these challenges and ensure that their loved ones’ wishes are honored while minimizing their financial impact.
