Ask a tax advisor on the topic of Inheritance tax

Tax exemption for self-occupied residential property of the deceased.

April 29, 2021 | 40,00 EUR | answered by Steuerberater Knut Christiansen

Facts:
My father is the owner of a long, rectangular piece of land running from north to south, with a width of approximately 20m and a length (along the road) of approximately 50m. On the southern side of the property near the boundary line stands the single-family house he uses.
Several years ago, a portion of the land was transferred to me, specifically on the northern side of the property. A plan was drawn up during the transfer to show which part was being transferred, but the land was not surveyed and divided, it still exists as a single plot, and we are currently "co-owners" of the property. However, according to the transfer agreement, either party can request a division at any time.
The (intellectual) boundary of my share is at least 15 meters away from the house, and my share of the land does not play a role in the supply or access to the house.
In the event of inheritance, I plan to move into the house and use it for at least 10 years.

Question:
As far as I know, there is usually no inheritance tax on the property if it was the deceased's primary residence. Is it problematic that I am a co-owner of the property, even though the document clearly states that my portion of the land is "far" from the property?

Additional question:
If I can take advantage of the tax exemption, does it only apply to the house and the built-up land, or does it also apply to the rest of the southern portion of the property?

Steuerberater Knut Christiansen

Good day and thank you for using frag-einen.com!

Regarding your question, I would like to provide the following information within the scope of an initial consultation and the fee granted (of which only 50% will reach me).

The acquisition of a family home by inheritance is tax-exempt if the acquirer (in this case: you as the child) immediately occupies it after the death of the deceased (meaning: within approximately 6 months) and resides there for at least 10 years. The size of the apartment is limited to 200 square meters.

The concept of an apartment is determined according to inheritance tax guidelines (ErbStR R E 13.3 in conjunction with R E 13.4 Abs. 7) based on actual use. Therefore, it would be sufficient if your father used the apartment and you then move in. The civil ownership of a developed property is generally exempt. Therefore, if it is a piece of land (a plot/parcel), the entire property would fall under the exemption (see also: https://www.advocatio.de/news/1535098683.html).

I hope this answers your question, otherwise feel free to ask for further clarification at no additional cost.

I would like to point out that this forum cannot replace a detailed and personal tax consultation, but is mainly intended to provide an initial tax assessment. By adding or omitting relevant information, the legal assessment of your issue could be different.

Best regards,

Knut Christiansen
Tax advisor