Income Tax: How to declare inheritance

If you received an inheritance property and don’t know what to do? Know that it is necessary to declare it in the Income Tax. There are some precautions when filling out and the other heirs. You can also take advantage of the tax benefit to update the value of the heritage property to the current market price.

Without further ado, see how to declare your inheritance assets in the Income Tax.

What we will see in this article:

1. Gather documents on participation of heirs

First of all, have a copy of the sharing document, which is the document that details all the participation of each heir in the assets left. It is also a document issued at the conclusion of the inventory process, and the date of issuance of the sharing form, the amounts and their participation in each asset informed in the document are a basis for the declaration.

If you are the only heir, the estate may have been made through a letter of adjudication. But don’t worry, it has the same function as the sharing form.

Also, have a copy of the property documents, license plate or deed, for example. If you have receipts and invoices for renovations and extensions made by the deceased person, they will also be useful for filling out the declaration, especially due to the capital gains calculation program (GCAP 2021), as they help to reduce the possible tax.

2. Always talk to the lawyer (and other heirs)

When filling out the declaration, the information provided by you and the other heirs must go together, that is, be consistent. So keep in touch with them and the attorney in charge of the probate process so that nothing is out of place.

A good idea is to arrange a day to fill out the Income Tax returns together. If the deceased had several real estate or other assets, this exchange of information between you will be essential to avoid errors in the filling, which can take everyone’s statements to the fine mesh. Don’t forget that you will also need to make the final estate declaration. In it, the deceased’s assets will be declared as donations to the heirs. The deadline for submitting the final estate declaration is the same as for the heirs’ 2022 income tax return: May 31.

In addition, if the heirs choose to update the assets at market value, they will need to complete the capital gain calculation program (GCAP 2021) on behalf of the estate and import the file into the final IR statement of the estate.

3. Inform the property on the “Assets and Rights” sheet

At the time of the Income Tax declaration, the property received as an inheritance in the “Assets and Rights” form. To do so, just click on “new” to create a new form. Then, select the “01-real estate” group and choose the property code, for example: “11-apartment”, “12-house” or “13-land”.

In the “Discrimination” field, inform about the property received as an inheritance, inserting the name and CPF of the deceased person. Also make it clear what your participation in the property is (whole property, half, one third, 10%).

The next step is to fill in the property’s address and registration number at the property registry office. To inform the values, put zero in the field referring to the last year and the value proportional to your share in the property in the current year.

Attention, if the inheritance has not been updated to market value, enter the original value. But, they decided to update the property to market value, inform your share proportional to that value.

4. Complete the “Exempt Income” form

As the inheritance property represents a donation from the deceased to the heirs. Therefore, you need to inform the value of your share in the “Exempt and Non-Taxable Income” form, using the code “14 – Patrimonial transfers – donations and inheritances”.

Then, inform the name and CPF of the deceased person, putting the same value as your share of the property, which you declared in the “Assets and Rights” form. This also applies if you received more than one inheritance asset, and if you opted to update the property’s market value, also inform this sheet of the updated value, proportional to your share.

5. In the end, the heirs pay

As much as the tax comes out in the name of the deceased, those who pay are the heirs. The calculation on capital gain due to the property price update will be made by the GCAP 2021 program and already included in the final declaration.

However, in the declaration of the heir, the property is tax-free, as if it were a donation. In practice, the tax will be apportioned among the remaining heirs, using the Darf issued by GCAP 2021 in the name of the deceased.