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 this case, the sole heiress of a two-family home with two apartments and land moved into one of the two apartments not six months later, but around one and a half years later. However, family homes are generally only exempt from inheritance tax if they are occupied by the heirs 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 initially brought an action before the Düsseldorf tax court (Finanzgericht Düsseldorf - FG). The inventory first had to be removed from the apartment or sold in order to be able to start the necessary work. The renovation work prior to moving in was necessary as the property had a maintenance backlog. However, due to the lack of craftsmen and the 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 tax court. However, she did not want to let that sit on her head. She lodged an appeal. She was then successful before the BFH. The judgment of the tax court was set aside and the case was referred back for a different hearing and decision. However, the BFH only ruled this way in this case because the single parent (plaintiff) was able to credibly demonstrate 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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