Extinction of usufruct
July 28, 2011 | 30,00 EUR | answered by Michael Herrmann
In 2006, my mother transferred a single-family house to me. The current value of the property is approximately EUR 350,000. A usufruct in favor of my mother was registered with a value of EUR 15,000 per year.
The property has been rented out so far. My mother has received all income and also covered all expenses.
Now I want to move into the property with my family. The usufruct in favor of my mother should now be deleted so that I can register a mortgage for financing renovations, etc.
Does the deletion of the usufruct have any tax implications that I need to consider? Particularly because the transfer of the house is less than 10 years ago? Do I have to pay gift tax due to the deletion of the usufruct?
Thank you in advance.
Dear inquirer,
First of all, thank you for your inquiry, which I am happy to answer based on the information provided and in the context of your initial consultation. The response is based on the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
At the time of the original gift, the house was transferred with the burden of usufruct. The usufruct did not reduce the taxable acquisition for gift tax purposes under the legislation at the time. However, the tax on the capital value of the usufruct was deferred until its expiration.
If this burden is now removed with effect for the future, the deferred gift tax must be paid.
You should review the gift tax assessment from that time. If no tax was assessed, or no portion was deferred, then there is no tax to be paid now. This is possible if the previous tax value, which did not yet represent the market value, was below the exemption thresholds.
The transfer within 10 years did not affect the taxation today under the legislation of 2006, as the burden did not reduce the tax value at that time. This was changed after the introduction of § 25 ErbStG on January 1, 2009, but it only applies to transfers from that date onwards.
I hope that these details have provided you with a sufficient overview of the situation within the scope of your initial consultation, and I remain
Yours sincerely,
Michael Herrmann
Graduate Financial Economist (FH)
Tax consultant
