Income Tax 2022: attention points regarding the declaration of donation and inheritance

Taxpayer that received any donations or inheritance last year must provide that information on the IR 2022

Donation and inheritance are subjects that usually make the taxpayer vacillate when preparing to submit their declaration of Income Tax. Is there something to be informed? Is there tax to be paid? Understand how it works and get ready for the 2022 IR submittance.

Check out 2022 Income Tax’s general rules here.

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Donation and inheritance on 2022 IR: attention points

The first point to be understood is that there is no collection of Income Tax on inheritance and donation, for these operations are already taxed on the state level through ITCMD (Tax on Causa Mortis Transmission and Donation, or Imposto sobre Transmissão Causa Mortis e Doação).

Nonetheless, people who have received any inheritance or donation in 2021 must provide related information on their declaration of Income Tax 2022. It is worth remembering that the donor ought to also report the aforesaid operation.

Attention should also be put into eventual capital gains on inherited assets, or the ones received in form of donations. In the time of acquisition, the due assessment of such capital gain must be present.

How to declare donations?

Donee

Those who receive donations must inform this event onto the “Rendimentos Isentos e Não Tributáveis” (Exempt and Non-Taxable Earnings) form, on the line “Transferências Patrimoniais – Doações e Heranças” (Transfer of Property – Donations and Inheritance). Aquele que recebe uma doação precisa informar tal evento na ficha “Rendimentos Isentos e Não Tributáveis”, na linha de “Transferências Patrimoniais - Doações e Heranças”.

On the “Bens e Direitos” (Assets and Rights) list, it is important to declare the asset received through donation, whether it is a house, an apartment, a lot or even stocks, for instance. In the cases in which the donation is received in cash, the value should integrate the balance of the account or the investment, having already been typically declared.

Donor

On the “Doações efetuadas” (Donations made) form, there is a field in which the person who has received such asset or cash should be indicated.

It is worth paying attention to the fact that there should be no divergence between what is informed by the donor and by the donee in their respective declarations.

Inheritance: where to start?

This situation requires organization in regard to documents, and, also, much attention to the information related. It is necessary to insert data that are in the copy of the final judgment of distribution (more than one heir), or in the adjudication letter (in case of a single heir).

It is important to clarify that you should only declare what you receive after the probate process is over.

When there are multiple heirs, an important point is to guarantee the information provided by all of them is in line, mainly regarding to the parts inherited by each one of the people involved, values, or data pertaining a real property.

It is also valid to plan together whether the value of the received real property is to be updated into the current market value, whenever that is the case.

It is always a good idea to remember that errors and incoherence found on the forms might end up taking the people involved to tax audit operations and fines.

Another obligation related to inheritance is the preparation of the declaration of probate estate, which should be submitted up to April 29, the same deadline for this year’s IR declaration submittance.

How to declare the inheritance?

When it comes to real estate, the heir must provide information on the “Bens e Direitos” (Goods and rights) forms. It is important to inform whether they bear the total, 50%, a third or any part of the asset, for instance. This information must also be present in the “Rendimentos Isentos” (Exempted Revenue) form. Whenever there is more than one asset to be received as inheritance, inform the sum of their values.

When the inheritance is totally received in cash, it will be shown on the declaration as a deposit into a checking account or investment.

Check out a special vídeo about inheritance and donations on our “Individual Taxpayer Minute” series:

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By merely receiving a donation or an inheritance, the taxpayer is not mandated to provide such accounting information to the Federal Revenue Office. The impact of those values in the asset composition must be considered. Thus, they are not obliged to declare in case it does not reach the values detailed onto the compulsory range. You can take another look at the rules aqui.

Simplify 2022 Income Tax

DPC’s Individual Taxpayer team assists clients on the preparation and the submittance of the IR declaration, granting comfort and tranquility regarding the compliance of this annual obligation

Also count on the support for the preparation of the declaration of probate estate, as well as guidance in regard to the taxes levied on inheritance and donations, property and estate planning: dpc@dpc.com.br.