According to a new Federal Fiscal Court (Bundesfinanzhof, BFH) ruling, this would apply even if own use for residential purposes were to continue on the basis of a lifelong usufruct. In the case in question, a woman had inherited, from her husband, a single-family home, which they had jointly occupied, and had initially remained living in it. One-and-a-half years after the accrual of the inheritance, she gifted the house to her daughter. Even though she reserved a lifelong usufruct for herself and carried on living in the house the local tax office retroactively revoked the inheritance tax exemption because the claimant had gifted the family home.
The BFH, in it ruling from 11.7.2019 (case reference: II R 38/16, see www.bundesfinanzhof.de) confirmed that the tax concession had ceased to apply retroactively and then pointed out that, through the tax exemption, the legislator had wanted to protect family living space and promote the growth of home ownership by families. That is why the exemption could only be claimed by those surviving spouses or life partners who have become owners of a property and live in it themselves.