Subsequent taxation in the case of transfer of ownership of a family home

Even in the case of continued owner-occupation within the framework of a lifelong right of residence, the transfer of a family home within ten years leads to subsequent taxation for inheritance tax purposes.

The inheritance tax exemption for the acquisition of an owner-occupied family home by the surviving spouse or civil partner ceases to apply retroactively if the heir transfers ownership of the family home to a third party within ten years of the inheritance. So far, the statutory regulation is clear. However, the Federal Fiscal Court has now clarified that this rule on retrospective taxation also applies if the owner continues to use the family home for residential purposes on the basis of a lifelong usufruct. A transfer of the family home to the joint children before the ten-year period has expired is therefore tax-damaging even if a lifelong right of residence for the family home remains in place.