Tax tip: What a house as a gift is worth

The gift of a property can lead to gift tax if the statutory exemption amounts are exceeded. However, as there is no purchase price for a gift, the question arises as to the value of the property for gift tax purposes. A judgement by the Berlin-Brandenburg Fiscal Court dated 18 December 2024 (case reference: 16 K 17071/23) makes it clear that considerable fluctuations can occur here. While the taxpayer assumed a value of around 3.6 million euros, the tax office determined a value of around 8.7 million euros for the transferred rental property.

How do such deviations arise? According to tax law, the basis of assessment is the property value or value in use. This is calculated in accordance with the provisions of the Valuation Act in a standardised procedure with many standardisations. In the case of a rental property, the capitalised earnings value is determined by capitalising the rent over the useful life of the building with the so-called property interest rate and adding the land value.

However, this procedure does not take into account special cases such as lack of repairs, noise or slopes. The Valuation Act allows the taxpayer to prove a lower value than the taxable value by means of an expert's report. In the present case, the taxpayer had such an expert opinion drawn up. A dispute then arose as to whether the actual structural utilisation or that of the development plan was decisive in determining the value of the land.

In general, the value of the land is determined from the product of the plot area and the standard land value. The standard land values are determined by local expert committees for all areas. The expert committee forms guideline value zones that cover areas that largely correspond in terms of type and extent of use. For each zone, a guideline value per square metre is determined for a reference property with certain characteristics. The floor area ratio plays a decisive role here. Put simply, it determines how many storeys may be built on a plot of land. The higher the floor area ratio of a property, the higher the value of the land. If the floor area ratio of the property to be valued differs from that of the reference property, the standard land value is adjusted.

In the judgement case, the question was whether the actual floor area ratio of 4.16 or the floor area ratio of 1.5 permitted by the development plan was decisive. If, for example, the standard land value is 1,000 euros with a floor area ratio of 1.5, this increases to around 2,170 euros - more than double - with a floor area ratio of 4.16 according to the calculation table of the expert committee.

However, the Berlin-Brandenburg Fiscal Court ruled in the taxpayer's favour that the higher actual building use is decisive and not the lower use permitted under the development plan. However, an appeal has been lodged, meaning that the Federal Fiscal Court (case no. II R 7/25) will have to decide on this for the first time. In addition, reference should be made to another current appeal procedure (case no. II R 7/24) against the judgement of the Munich Fiscal Court in the same matter. Particular attention should therefore be paid to the standard land values and the applicable floor area figures when donating property.