The tax allowances under § 16 of the German Inheritance and Gift Tax Act (ErbStG) apply equally to gifts and inheritances and can be used multiple times through clever timing.
Since the tax allowances become available again every ten years, an early, staggered transfer of real estate assets can significantly reduce the tax burden within a family.
In addition, under certain conditions, a complete tax exemption may apply to a self-occupied residential property for spouses or children if they personally reside in the property for at least ten years.
If the tax allowances are exceeded, a progressive tax rate applies, depending on the tax bracket and the amount exceeding the allowance – spouses and children benefit from the most favorable tax brackets and rates ranging between 7 and 30 percent.
Through a so-called chain gift across multiple generations, additional tax allowances can be utilized, provided the intermediary person can genuinely dispose of the property freely and there is no obligation to pass it on.
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