
Inherit, sell, pay no tax
This change in case law not only simplifies the sale of inherited property. It also makes it easier to reach an amicable agreement on what should happen to the joint inheritance.
Disagreements and, in the worst case, disputes often complicate the dissolution of a community of heirs. The new law from Germany's highest finance court will at least help those who want to sell the property.
How did the change in case law come about?
The case was brought by a man who had inherited real estate from a woman together with her children. The community of heirs consisting of the three persons was dissolved with the result that the man took over the entire estate and ultimately sold it. Since he had bought part of the estate from the children, the tax office demanded income tax for these shares, as is customary in such cases. This was because, according to Section 23(1) sentence 1 no. 1 of the Income Tax Act (EStG), this was considered a private sale.
No classic real estate purchase, no classic taxes
In its ruling of September 26, 2023, the Federal Finance Court decided that the acquisition of the children's shares was not a classic real estate purchase and that income tax was therefore not applicable. Background to the change in case law: The prerequisite for taxation under the previous rules was that the asset sold, in this case real estate, had also been acquired previously. This was not the case when focusing on the purchase of inheritance shares from a community of heirs.
Have you inherited real estate and are unsure what to do with it? Don't hesitate to contact us. We are familiar with the subject of real estate inheritance and will be happy to advise you.
Notes
For reasons of readability, the generic masculine form is used in this text. Female and other gender identities are expressly included insofar as this is necessary for the statement.
Legal notice: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific case clarified by a lawyer and/or tax advisor.
Photo: © nmann77/AdobeStock