Inheritance Tax: How to Keep the Family Home with Garden Tax-Free

TVS News AI, editorially supervised, presents Inheritance Tax: How to Keep the Family Home with Garden Tax-Free.

When a parent dies and an owned house is part of the estate, many heirs immediately ask: Does the family home actually remain tax-free, or does the tax office claim a large chunk of the assets? After all, the property often represents the family's largest asset – and every euro counts here.

At least initially, the answer is reassuring: Whoever moves into the inherited family home themselves pays no inheritance tax. That is the prevailing line – and the decisive point why heirs can often breathe a sigh of relief.

But now comes the clincher that surprises many: The Bundesfinanzhof (BFH) interprets this exemption deliberately generously. In certain cases, it even includes a sprawling garden. This is made possible by one condition – and now everything depends on it.

Family home and inheritance tax – how the exemption applies

The basic rule in a nutshell: If a self-used family home is inherited and actually lived in by the heir, no inheritance tax is due on the property. So anyone who stays there or moves in themselves usually has no reason to worry about the largest asset component.

Whoever moves into the inherited family home pays no inheritance tax.

Big garden, small tax – what the BFH allows

Around the house, it gets really exciting when not just a few square meters of greenery but a sprawling garden is included. This is precisely where it becomes clear how generously the exemption is actually interpreted: The BFH deliberately draws the boundaries wide – and includes the garden in the exempted area.

The BFH interprets this exemption generously and includes even a sprawling garden – under one condition.

What specific condition this is in individual cases and how far the garden can extend is precisely the point where the details make the decisive difference. This is where it pays to look at the detailed article in the Handelsblatt archive or seek individual tax advice.

What heirs should take away now

The rule of thumb remains simple: Move in yourself, save inheritance tax. Anyone who instead rents out, sells, or only partially uses the home themselves risks the exemption not applying. Especially with large properties and extensive gardens, it pays to document self-use properly and, when in doubt, check once more rather than too little.

Added value for you

Want more on inheritance, wealth, and tax pitfalls? On The Viral Source, you'll find ongoing analyses that help you make the right decisions – before, during, or after an inheritance. Good luck putting it into practice.