An heir does not necessarily have to move into the family home within six months in order to benefit from an inheritance tax exemption. This has now been decided by the Federal Fiscal Court (Bundesfinanzhof, BFH) (II R 6/21). In the case at hand, the sole heir of a two-family house with two apartments and land did not move into one of the two apartments six months later, but about one and a half years later. However, family homes are generally only exempt from inheritance tax if the heirs move into them after approximately six months. Also because the sole heir did not move into the apartment immediately, the tax office assessed an inheritance tax of around 80,000 euros.
The sole heir then took legal action before the Düsseldorf Fiscal Court (FG). First of all, the inventory had to be removed from the apartment or sold in order to be able to start the necessary work. The renovation work before moving in had been necessary because the property had a maintenance backlog. However, due to the lack of craftsmen and health problems of the sole heiress, the work could not be carried out beforehand.
However, the sole heir initially failed in her action before the Düsseldorf Regional Tax Court. However, she did not want to let that go. She appealed. She was then successful before the BFH. The ruling of the FG was overturned and the case was referred back for a different hearing and decision. However, the BFH only decided this way in this case because the single leg (plaintiff) was able to credibly explain and prove why it was not possible to move into the apartment earlier.
Source: bundesfinanzhof.de/judgment of March 16, 2022, II R 6/21
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