If an heir cannot use the family home themselves for health reasons, they do not lose the inheritance tax exemption for it. This was decided by the Federal Fiscal Court (BFH, judgment of December 1, 2021 - II R 18/20). In this case, a claimant had lived in the single-family home inherited from her father for a while. However, she moved out after just seven years due to health problems.
According to the BFH, the tax exemption under Section 13 para. 1 no. 4c of the Inheritance and Gift Tax Act normally requires the heir to use the inherited family home themselves for ten years. However, this is not the case if he is prevented from doing so for "compelling reasons". However, compelling reasons are very rare. This is because, according to the BFH, they require not only the impossibility but also the unreasonableness of using the family home oneself.
In the current case, the claimant stated that she could hardly move around in the detached house due to health problems and was also unable to live there without outside help. In such cases, according to the BFH, one can no longer speak of independent housekeeping. However, the tax court must now examine the extent of the claimant's health impairment with her assistance.
Source and further information: bundesfinanzhof.de
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