Tax tip: Determine the exact living space for property inheritance

The inheritance of a family home is exempt from inheritance tax under certain conditions. This is possible both in the case of acquisition upon death by a spouse (or registered partner) and by a child. In both cases, however, both the spouse and the child must use the family home themselves immediately after the death. In addition, a family home can only be where the centre of family life is located. This rules out second homes.

In the case of a purchase by a child, the exemption is also limited to 200 square metres of living space. For example, if the family home comprises 400 square metres of living space and the taxable value of the property is two million euros, only 50 percent, i.e. one million euros, is tax-exempt.

This means that a key point for tax exemption for a child is the exact amount of living space. This must be determined in accordance with the provisions of the Living Space Ordinance and the state building regulations. There are special features here, such as sloping ceilings, balconies, roof gardens and terraces through to landings, door and window recesses. It is also not uncommon for living spaces in cellars or basements not to fulfil the requirements for a living space to be taken into account, as they do not have sufficient daylight or protrude less than 1.4 metres above ground level.

A recent case of advice shows that it can be worth having a specialist take measurements. After the death of the mother, the son was supposed to move in immediately. The mother's documents indicated a living space of around 300 square metres with a market value of around two million euros. However, the exact calculation only showed a living space of 200 square metres, which was mainly due to the basement. As a result, this led to an exemption of around 667,000 euros, so that at a tax rate of 19 per cent, around 127,000 euros in inheritance tax could be saved.