Bequeathing a property as part of a company's assets

If you wish to bequeath a property that is part of the assets of a company (e.g. a limited liability company), it is possible within the framework of anticipated succession to transfer shares in the company instead of the property. In doing so, the personal allowances, low progression levels, etc. can be utilised again every ten years.

In addition, the tax exemptions for real estate available under the Inheritance and Gift Tax Act can be used, for example, the tax exemption for the transfer of real estate rented out for residential purposes (is currently 10%) or the tax concessions for listed properties.

Exception for housing companies
The tax exemptions applicable to business assets are generally not applicable, as real estate is considered to be a so-called harmful administrative asset when determining the tax relief on business assets. An exception exists for housing companies. Here, at best, the entire real estate portfolio is exempt from inheritance and gift tax at 85% (Regelverschonung) or 100% (Optionsverschonung), limited to 26 million euros per acquirer.

The prerequisite for this is that the properties constitute business assets and that the main purpose of the business is the rental of flats. The fulfilment of this main business purpose must constitute an economic business operation within the meaning of the German Fiscal Code (Abgabenordnung).