Real estate transfer tax-free acquisition from co-heirs

The tax exemption pursuant to Section 3 No. 3 GrEStG also applies if co-heirs initially agree on the formation of fractional ownership and, in a second step, the transfer to a co-heir if the latter immediately becomes the sole owner. This was decided by the 8th Senate of the Münster Fiscal Court.

The plaintiff and her sister were co-heirs of their parents. A property belonged to the community of heirs. As part of a notarized contract, the sisters agreed to dissolve the community of heirs and to convert the joint ownership into fractional ownership. The plaintiff was then to acquire half of her sister's share of the property for EUR 31,500. In implementation of this agreement, the plaintiff was directly entered in the land register as the sole owner.

The tax office assessed real estate transfer tax of EUR 2,047 (6.5 % of EUR 31,500) against the plaintiff. The tax exemption provision of § 3 no. 3 GrEStG, which applies to the settlement of communities of heirs, only applies to the acquisition of the fractional ownership from the community of heirs, but not to the acquisition of the co-ownership share from the sister, which is to be assessed separately.

The court took a different view and upheld the claim brought by the plaintiff. Contrary to the opinion of the tax office, § 3 no. 3 EStG was relevant for the entire transaction. The plaintiff had acquired the property share from the community of heirs in order to divide the estate. The tax exemption did not apply if the joint ownership was converted into fractional ownership and the co-ownership share was later transferred. In the present case, however, no fractional ownership of the property had actually been created. This would have first required a conveyance and the entry of both sisters as co-owners in the land register. Since the plaintiff was entered in the land register as the sole owner without any intermediate step, the property was still jointly owned by the community of heirs up to this point in time.

This assessment is not altered by the fact, correctly assessed by the tax office, that the notarial agreement resulted in two acquisition transactions. These two transactions were to be assessed as part of an overall agreement and were therefore tax-exempt as a whole. As it can be assumed that one part of the legal transaction would not have been carried out without the other, there is a single contract.

(Münster tax court, notification of 16.11.2020 regarding the ruling of 29.10.2020 - 8 K 809/18)