Anyone wishing to take over an inherited family home tax-free must, as a general rule, move into the property themselves within six months. But what happens if, for understandable reasons, the move takes considerably longer? In a recent ruling, the Federal Fiscal Court has clarified that a delayed move does not necessarily invalidate the tax exemption.
The case: Right of residence and refurbishment are delaying the move-in
In the case in question, a son inherited his parents’ house. However, the mother still held a right of residence and exercised this until June 2022, before moving into a care home. Extensive renovation work then took place. The heir did not actually move in until the end of 2023, i.e. almost two years after the inheritance took effect.
Nevertheless, the Lower Saxony Finance Court recognised the tax exemption. The Federal Finance Court upheld this decision by dismissing the tax office’s appeal (BFH, ruling of 27 May 2026, ref. II B 41/25).
What really matters
The crucial point is not the actual move-in, but the decision to occupy the property oneself. This decision must be made within six months, calculated from the date on which the heir is legally able to move into the property. As long as a third party’s right of residence prevents the property from being used, the time limit does not yet begin to run.
In the case described, the decision to use the property was supported by several factors: the heir and his wife had already made contact with an energy adviser and tradespeople in April 2022, that is, before his mother moved into the care home. These contacts with tradespeople served as concrete evidence of a genuine intention to use the property.
Practical implications for heirs
For anyone who wishes to live in an inherited family home themselves, this teaches an important lesson:
- The decision on the use of the property must be documented within the specified time limit, for example through quotes from tradespeople, energy assessments or written plans.
- If moving in is delayed by objective obstacles, such as an existing right of residence or necessary renovation work, this does not automatically affect the tax exemption.
- It is important that the delay is due to circumstances relating to the property itself and is not the result of personal decisions made by the heir.
One question, however, remains unanswered: the Federal Fiscal Court (BFH) has not yet ruled definitively on whether an existing right of residence generally postpones the start of the time limit. In this specific case, the mother had already moved out before the six-month period had expired, which is why it was not necessary to provide a definitive answer to this question. The legal position therefore remains somewhat unclear.
Tax exemption can be substantial
The inheritance tax exemption for the family home can amount to a considerable sum, depending on the value of the property. The total value of the owner-occupied home remains tax-free if the heir designates the property for their own use without undue delay and lives there for at least ten years.
Anyone finding themselves in a similar situation should document their decision regarding use at an early stage and in detail. In individual cases, it is advisable to seek tax advice, as the exact requirements depend heavily on the specific circumstances.
Source: Haufe: Property
This post and the accompanying image were created with the help of AI and have been editorially reviewed.
