Anyone who is required to pay tax on an inherited plot of land has the option of declaring a value lower than that determined by the tax office. This is subject to the provision of an expert’s report substantiating this lower market value. But what happens if the tax office or the court simply disregards the valuation report because the property was subsequently sold for a higher price? The Federal Fiscal Court has drawn clear boundaries in this regard in its ruling of 4 August 2026 (Ref. II B 87/25).
What had happened?
An heir had inherited two mixed-use plots of land, the owner of which had died in May 2020. He had the plots valued by a publicly appointed and sworn valuer. The expert determined values of 210,000 euros and 305,000 euros for the two properties. The tax office, however, applied significantly higher assessed values of around 291,000 euros and 405,000 euros and disregarded the expert reports.
The crux of the matter: the heir sold the plots of land in February 2021 for a total of 900,000 euros – a price considerably higher than the valuations. Both the tax office and the Düsseldorf Finance Court (judgement of 27 November 2025) regarded this as grounds for rejecting the valuations in their entirety. For the court, the matter was thus settled.
The Federal Fiscal Court (BFH) disagrees with this approach
The Federal Fiscal Court allowed the appeal and criticised the Fiscal Court’s approach as constituting a procedural error. A court may not reject a properly prepared expert report across the board simply because a subsequent purchase price turned out to be higher. Instead, the court must examine the content of the report and provide specific reasons as to why the expert’s individual valuation methods are not convincing.
In the present case, the expert had taken into account defect and refurbishment costs of 20,500 euros and 80,500 euros respectively. The Finance Court did not address these specific items at all. The Federal Fiscal Court expressly criticised this.
What is the legal position?
Under the Valuation Act, an heir may demonstrate that the market value of a property is lower if the value determined in accordance with the statutory valuation procedures is too high. In principle, they may provide such evidence by means of an expert’s report. The report must be accepted if it is plausible and complies with the relevant valuation regulations.
It is important to note that, according to the clear wording of the law, a later purchase price may serve as evidence of a lower market value, but only in one direction. A higher purchase price cannot be used to adjust the value of the property upwards for inheritance tax purposes. The statutory provision protects the taxpayer, not the tax authorities.
What does this mean for heirs?
The ruling strengthens the rights of heirs who wish to demonstrate a lower value for inherited land. Courts and tax authorities must give serious consideration to expert reports and must not dismiss them simply by pointing to a higher subsequent sale price.
- A properly prepared expert report carries considerable weight in the determination procedure.
- Individual shortcomings in the report only justify the correction of those points, not the rejection of the report in its entirety.
- A higher purchase price cannot further increase the value determined by the tax office.
Anyone wishing to declare inherited property at a lower value in their inheritance tax return should commission a qualified valuation report at an early stage. In the event of a dispute, it is worth seeking legal or tax advice in order to consistently assert one’s rights.
Source: Haufe: Tax
This post and the accompanying image were created with the help of AI and have been editorially reviewed.
