Exemption from inheritance tax for a family home requires, among other things, that the beneficiary immediately (without culpable delay) uses the home, which is located on a developed property, for their own residential purposes after the inheritance (Section 13 (1) no. 4c ErbStG). This means that the heir can only receive the tax exemption if he/she intends to use the house for his/her own purposes within a reasonable period of time after the inheritance and actually does so. A reasonable period is generally a period of six months after the inheritance.
Practical example:
The plaintiff is the sole heir of his father (testator), who died in 2021. The estate included 3/4 of a developed property (co-ownership share in a semi-detached house with a total living space of 90 square meters), in which the testator had lived until his death. From November 2021, the plaintiff began to clear the semi-detached house himself (without the involvement of external companies) and to carry out minor renovation work himself from March 2022. On March 4, 2022, the plaintiff received an initial cost estimate for the conversion (total costs for the conversion to two usage units € 275,881.67 and total costs for the conversion to one usage unit € 191,017.87). At this time, the plaintiff had equity funds totaling approximately €30,000. External companies were not commissioned with the refurbishment or conversion in 2022.
The plaintiff only lived in the semi-detached house on a daily basis until the fall of 2022 and continued to live in his previous home. Since April 2024, the plaintiff has lived in the semi-detached house permanently and since April 2024, the plaintiff's main place of residence has also been there. The tax office rejected the inheritance tax exemption for the family home because more than two and a half years had passed since the inheritance when the heir moved in, for reasons for which he himself was responsible.
The tax court has ruled that the tax exemption for a family home does not apply if the move-in takes place more than two and a half years after the inheritance and there are no valid reasons for this delayed move-in that cannot be attributed to the heir. In the case in dispute, the actual move into the apartment - which was already habitable in principle from the date of inheritance - did not take place until 32 months after the death of the testator. Minor repairs were not started until seven months after the inheritance. Offers from external companies for repair and conversion work were only obtained after more than a year had passed since the inheritance. There is no evidence as to when which specific work on the property was carried out by the heir himself and when which craftsmen/companies were commissioned by the heir to carry out which specific renovation or refurbishment work on the property. The first efforts to obtain external financing for the renovation work were only made more than a year after the inheritance. There were no sustained and targeted efforts to renovate the property within the first 15 months of the inheritance.
The tax exemption provision of Section 13 para. 1 no. 4c sentence 1 ErbStG may not be interpreted extensively, but must generally be interpreted rather restrictively. As the plaintiff did not provide sufficient evidence, even after the oral hearing, that he „immediately designated“ the semi-detached house for his own use, the action cannot be successful.