Status: 03.12.2023, 21:49 PM
By: Corinna Maier
The owner-occupied house is usually the most important part of a family fortune. The tax authorities grant the "family home" a special status.
Munich – What does the tax authorities mean by a family home? Who can benefit from the scheme? And why is it better to transfer the property during your lifetime in some cases? We talked about this with the Munich-based specialist lawyer for inheritance law, Anton Steiner, who is also president of the German Forum for Inheritance Law.
Inheriting real estate: who doesn't have to pay taxes?
Who can inherit a family home tax-free?
spouses, children and, in the case of deceased children, grandchildren.
And under what conditions?
In the case of spouses, the legislator is the most generous. There is no limit to the value or size. So: It can also be the villa on Lake Starnberg for 30 million euros, which can also be transferred tax-free between married couples. And very important: The transfer can also be made during one's lifetime, through a donation.
You can't do that with children?
For whom is such a donation recommended?
If one spouse is significantly older or very ill, it may make sense to transfer the property or half of the property during their lifetime. This has another advantage: the beneficiary can, if he or she wants, sell the house the next day without losing the tax advantage.
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Fancy a voyage of discovery?
Only at the time of the donation do they both have to live together in the house?
Exactly. Mind you, this only applies to donations. If one spouse inherits the family home upon death, other conditions for tax exemption apply.
Illogically, but in this case, the law requires that the person who inherits stay in the house for ten years. If you don't live in it for so long, the tax exemption is lost and the federal eagle grabs it.
What if someone moves out because they have to go to a nursing home?
This is considered an important reason. In this case, the tax exemption will be retained.
Are there any other important reasons?
Without debates, only death. This is so seriously stated in the tax directives. So, if the beneficiary dies before the end of the ten years, his heirs do not have to pay the tax in arrears.
The often hard-earned own house should remain in the family – if possible without tax deductions. This is possible as long as it concerns children or spouses. However, there are a number of conditions. © Robert Michael / dpa
What if the children are to get the family home?
In the case of children and grandchildren, there is no tax exemption in the case of a gift, which is only available upon death, i.e. if the house is inherited. In addition, children or grandchildren must stay in the house for ten years. And thirdly, there is a living space limit of 200 square meters. Only they are tax-free.
If the house now has 300 square feet of living space?
Then 200 square meters will remain tax-free and a third will be taxed. It is not an all-or-nothing principle. If the family home is worth 900,000 euros, 600,000 euros remain tax-free. The remaining 300,000 euros will go into the pot with any other inheritance, such as shares. After deducting the tax-free allowance for children of 400,000 euros, the tax is due – or not.
After all, the prerequisite for tax exemption is the purpose of housing. What if the granny flat is rented out or there is a yoga studio in the attic? So the property is partly used for commercial purposes?
First of all: A home office doesn't hurt. Unfortunately, everything else does. If 50 of my 200 square meters are rented, then I only have the tax exemption on a pro rata basis. It's like being in an apartment building. If I inherit an apartment building where my father lived in an apartment on the second floor, I will inherit that apartment tax-free—provided that I move in immediately for ten years. The rest of the house is subject to inheritance tax.
What does "without delay" mean to the tax office?
Usually, that's six months. But there are exceptions. For example, if a house or apartment needs to be renovated first or if there are tenants in the house who have to be sued out. That's how it is, if someone inherits the apartment of someone who no longer lives there at that time because he is in a retirement home, then the old tenant has to leave and the heir has to move in.
What if the heir has moved in and gets a great job offer in another city after five years? Does he have to pay the tax in full when he moves out? Or will the five years somehow be deducted?
No. If he moves out a day early, he pays the entire tax.
And if an heir has to go to a nursing home after a few years?
This is harmless. Moving to a nursing home is one of the very few reasons that the tax office accepts. Serious psychological problems are still conceivable if someone has to live in the parental home again, but then it becomes very difficult. Purely economic reasons, such as overly expensive maintenance, do not count.
What if someone passes on the house to their children within the ten-year period and secures the usufruct for themselves? Then he stays in the house according to the regulations.
Yes, but that still doesn't count. This is exactly the case that the Federal Fiscal Court has decided. A woman lived in the family home she had inherited and handed it over to her daughter during her lifetime, subject to usufruct. According to the judges, this was tax-detrimental. The daughter had to pay the inheritance tax.
How do several children who inherit their parents' home together benefit?
Only the child who moves in benefits.