Time limit for self-use of an inherited family home

If it takes longer than six months to start using an inherited family home for their own use, the heir is still entitled to inheritance tax relief if they immediately decided to use the property themselves and started to take the necessary measures.

Time and again, there are disputes with the tax office as to whether the owner-occupation of an inherited family home took place quickly enough to qualify for tax exemption. The tax office regularly grants a period of six months to make the decision to use the property for own use and put it into practice. However, if construction or renovation measures are necessary beforehand, the six months can quickly be exceeded.

This also happened to an heir who wanted to combine his father's semi-detached house with his own to form a single unit, but was thwarted by the damp in the basement, the weather and the tight order situation with the tradesmen. After the Federal Fiscal Court had criticized the standards originally applied by the tax office and the tax court as being too strict, the Münster Fiscal Court has now confirmed the entitlement to tax relief. Even though the construction work took almost three years in total, the heir demonstrably made the decision to use the property himself shortly after his father's death and obtained quotes for the renovation.

It is true that the heir has a duty to promote the renovation work and the removal of any defects in such a way that there are no unreasonable delays. However, a disproportionate effort to speed up the process is not necessary. Nor can the heir be blamed for the bad weather and the order situation of the tradesmen, according to the court.