Valuation discount for rental apartments does not apply to heritable building rights

The valuation discount for inheritance and gift tax for rental apartments does not apply to a property that is encumbered with a heritable building right.

For property let for residential purposes, there is a valuation discount of 10 % for inheritance and gift tax purposes if the property is not part of a business asset that already benefits from preferential treatment. However, according to the Düsseldorf tax court, this valuation discount does not apply to a property that is encumbered with a heritable building right. It is true that there are rented residential properties on the land for which the heritable building right holder is entitled to compensation after the heritable building right expires. However, at the time, the recipient is not yet the owner of the residential property and is therefore comparable to the owner of an undeveloped plot of land.