Termination of self-use of an inherited family home

The tax exemption for an inherited family home does not lapse only if the end of owner-occupancy within the ten-year period is based on objectively compelling reasons.

No inheritance tax is payable on an appropriate family home that the heir immediately uses himself. However, the tax exemption ceases to apply with effect for the past if the heir no longer uses the property himself within ten years of acquisition, unless he is prevented from using it himself for compelling reasons. The Federal Fiscal Court had to decide when exactly such compelling reasons exist and came to the conclusion that this is the case if self-use is objectively impossible or unreasonable. It is not sufficient if the heir only feels prevented from self-use due to personal or economic considerations of expediency.

This is particularly the case if the type and design of the property does not correspond to the personal ideas of the heir. Health impairments, on the other hand, may constitute compelling reasons if they make it impossible for the heir to run an independent household in the acquired family home. In this context, it is irrelevant whether independent housekeeping would be possible for the heir elsewhere. Only the usability of the inherited family home is decisive. The burden of establishing the circumstances that make independent use of the family home objectively impossible or unreasonable is borne by the heir.