In the case of an inheritance (or gift), the transferred property is in many cases fully subject to tax. This means that a valuation must be carried out for the property in accordance with the Valuation Act and this is fully included in the assessment basis. If the exemption amount (depending on the personal status between the donor/testator and the transferee) is exceeded, gift or inheritance tax is payable in the corresponding amount.
Family home regulations are generally very beneficial
The legislator deviates from these principles in specific cases, always concerning the so-called "family home." The purpose of these regulations is to avoid inheritance tax on the testator's own residence if, for example, the spouse survives and is named as the sole heir. It is always assumed that there can only be one family home per donor/testator. A total of three exemption provisions can be distinguished, which are briefly summarized in the following table:
Ultimately, these regulations mean that the family home is completely exempt and does not reduce the tax-free allowance, for example. It is therefore advisable to keep an eye on the use of this regulation in the context of testamentary provisions.
Observe restrictive case law on preferential treatment
Nevertheless, it should be noted that the case law of the Federal Fiscal Court has recently interpreted the provisions on family homes very restrictively. A violation can lead to the retroactive denial of the exemption provision and accordingly trigger inheritance tax (plus interest). Of relevance
are in particular the following judgments:
Due to the very narrow interpretation of the term "family home" by the Federal Fiscal Court (BFH), there is a risk in many cases that these conditions will be met for a considerable period of time, sometimes even for extended periods.
10 years. Due to the generally increased property prices (which also affect the value of the family home), when considering
the possible tax consequences must always be kept in mind.
Dr. Rainer Bräutigam
Certified Tax Advisor
rainer.braeutigam@moore-tk.de
0621 42508-20
