Settlement with co-heirs and real estate transfer tax for an inheritance community
May 7, 2013 | 70,00 EUR | answered by StB Patrick Färber
My wife, together with her two sisters, forms an inheritance community after the death of their father. The assets of the undivided inheritance community include inherited cash assets as well as a property (single-family house with a separate granny flat, which is currently occupied by my wife and me, expected to be occupied for approximately 2 more years). Upon request, my wife is to pay out her share of the inheritance in the property to one of the sisters (compensation for the co-heir with a 1/3 share).
My questions:
1) Can my wife claim the payment to the sister as acquisition costs for tax purposes?
If yes, how (e.g. as "extraordinary burden" or similar)?
2) Will my wife have to pay real estate transfer tax on the share of the property acquired from the sister?
(this purchase would be made with the intention of dividing the inheritance)
3) Would the purchase of additional shares of the property between the remaining heirs be subject to real estate transfer tax after the departure of this sister?
Thank you for your efforts!
Dear questioner,
I am happy to answer your question in consideration of the forum's rules, your contribution, and within the scope of an initial consultation as follows:
Question 1)
Indeed, you are correct that in this case, the withdrawal of an heir from the community of heirs in exchange for a cash settlement constitutes a transaction (= similar to a sale of the inheritance share or an acquisition).
Therefore, the paying sisters each have acquisition costs for a (partial) property including a granny flat. Unfortunately, acquisition costs for real estate are not immediately tax deductible. Only through depreciation of the property in the context of renting it out could one typically deduct 2% (possibly more) per year of the acquisition costs. There is no other option available.
Question 2)
No real estate transfer tax is payable for the sale of the property (§ 3 No. 3 GrEStG), even though the transaction itself is subject to real estate transfer tax (tax exemption).
Question 3)
As long as the community of heirs continues to exist, the answer to No. 2 applies. Overall, this provision is intended to favor the division of inheritance or properties belonging to an estate. Therefore, other transfers are also exempt from real estate transfer tax!
If you have any additional questions, feel free to ask.
