Real estate transfer tax in inheritance law
Real Estate Transfer Tax in Inheritance Law
If a property is transferred by inheritance, the question often arises as to whether real estate transfer tax is payable. The answer is not always clear, because not every acquisition by reason of death is tax-free. Anyone who plans incorrectly or acts too late risks unnecessary costs.
Real estate transfer tax is generally due on every acquisition of a property, including when the transfer of ownership occurs through inheritance, legacy or donation mortis causa
Time of Maturity
Real estate transfer tax always arises when a plot of land, a house or an apartment is transferred to another person. This also applies to:
- the acquisition by legal succession
- Wills (e.g. legacy, testament)
- Donations mortis causa
Important: The tax liability does not arise upon death, but only with the probate of the property. If the property is sold beforehand in the course of the estate, the tax is payable by the buyer.
In addition, § 1 GrEStG names further taxable transactions that can also occur in the context of inheritance, such as the assignment of a transfer claim, the acquisition of the right of exploitation, a change of shareholders or the unification of at least 95% of the shares in a company owning real estate.
Further information on taxable acquisition transactions can be found on our general page on real estate transfer tax.
Amount of Real Estate Transfer Tax in Case of Inheritance
In the case of gratuitous acquisition by inheritance within the privileged family circle, a tiered tariff is applied. The tax is calculated proportionally as follows:
- 3.5% for all amounts exceeding this
- 0.5% for the first €250,000 of the property value
- 2.0% for the next €150,000 (i.e. the part between €250,001 and €400,000)
- In the case of company transfers within the family, a allowance of €900,000 also applies; for agricultural and forestry properties, it is €365,000.
In addition to the gratuitous acquisition transactions, there are also partially gratuitous acquisitions. If the consideration is between 30% and 70% of the property value, both the tiered tariff and the general rate of 3.5% are applied proportionally. If the consideration is more than 70%, the full tax rate applies.
The consideration is any agreed service that the acquirer provides for the receipt of the property, such as a purchase price, the assumption of debts or the granting of a right of residence in favor of the seller.
Attention: This tariff only applies to acquisitions within the narrowly defined family circle, e.g. spouses, children, grandchildren, parents, siblings, nieces/nephews, foster or stepchildren as well as partners with a common main residence.
Assessment Basis:
The assessment of the tax is based on the fair market value of the property at the time of probate. The so-called property value is determined using a model or expert opinion.
For agricultural and forestry properties, the standard value remains decisive, provided that the area directly serves agricultural income. It is important to distinguish between real estate and agricultural or forestry assets: Properties that are used exclusively for agricultural or forestry purposes are counted as agricultural and forestry assets. All other properties fall under real estate assets. This classification has a direct impact on the assessment basis and the tax rate.
Example
If a son inherits a parental home with a fair market value of €300,000, the real estate transfer tax is:
- 0.5% of €250,000 = €1,250
- 2.0% of €50,000 = €1,000
→ Total tax: €2,250
Deferral or Payment in Installments of Real Estate Transfer Tax
Under certain conditions, the law allows payment in five annual installments, e.g. in the case of low liquidity or communities of heirs. The prerequisite is that the 0.5% rate is applied.
Tax-free Acquisitions
Exempt from real estate transfer tax are in particular:
- Transfers in the event of death to spouses or registered partners with regard to the main residence, if the living space does not exceed 150 m²
- Acquisitions by non-profit, charitable or ecclesiastical institutions
- Expropriations or transfers to avoid official interventions
- De minimis limits: no tax liability if the assessment basis is no more than €1,100 (in the case of property division up to €2,000)
- Operating allowance: €900,000 for real estate or €360,000 for agricultural and forestry assets in the case of gratuitous transactions
Registration Fee in the Land Register
Registration in the land register is only possible if the tax office has previously issued a certificate of no objection in accordance with § 160 BAO. You will receive this if the real estate transfer tax has been duly paid or no such tax has been incurred.
For certain groups of acquirers, the registration fee is:
- 1.1% of the fair market value (for third parties)
- 1.1% of three times the standard value (for family members, spouses, partners with main residence)
Your Benefits with Legal Assistance
We check for you:
- whether you are obliged to pay real estate transfer tax
- whether an exemption or reduction applies
- which assessment basis and which tariff are to be applied
- which deadlines, applications and documents must be observed
