Gifting a house to your children in Germany: tax and periods

What do I need to consider when transferring my house to my children?

The transfer is a gift and needs a notary. Each child can receive 400,000 euros tax-free from each parent every ten years, and no real estate transfer tax is due between parents and children. Three ten-year periods run separately. They concern the tax, reclaiming the gift if you need care, and your other children's compulsory share. If you want to keep living in the house, secure that with a usufruct or a right of residence and agree rights to reclaim in the contract.

€400,000

Allowance per child and parent, renewed every ten years

Real estate transfer tax between parents, children and grandchildren

3 periods

Tax, reclaim and compulsory share run separately

Gift, bequeath or sell?

A transfer during your lifetime is called anticipated succession (vorweggenommene Erbfolge) in German law. It is not always the best choice. I advise owners in Dresden to put the three routes side by side before they book a notary appointment.

Route	Tax	What you keep	Typical reason
Gift during your lifetime	Allowance can be used again every ten years	Only what you reserve (usufruct, right of residence, right to reclaim)	High property value, using allowances several times, settling succession early
Bequeath	Allowance used once on death	Everything until death	You want to keep control, the value is below the allowances
Sell	No gift tax, possibly tax on private sale gains	The purchase price	The house no longer fits, money is needed for care or old age

If your entire estate per child is below the allowance anyway, the gift brings no tax advantage, because no tax would be due on death either. Then another reason has to carry it, for example a clear succession among siblings.

How much is tax-free?

The allowances are set out in § 16 of the Inheritance and Gift Tax Act (ErbStG) and apply separately to each combination of donor and recipient.

Recipient	Allowance	Tax class
Spouse or registered civil partner	€500,000	I
Child, stepchild	€400,000	I
Grandchild	€200,000	I
Parents, siblings, nieces, nephews, children-in-law	€20,000	II
Everyone else	€20,000	III

Two parents can therefore transfer 800,000 euros to one child between them without gift tax. All gifts from the same person within ten years are added together (§ 14 ErbStG). Above the allowance, tax class I pays 7 percent up to 75,000 euros, 11 percent up to 300,000 euros and 15 percent up to 600,000 euros.

A detail with consequences

If a child later gives the house back to the parents, the parents only have a 20,000 euro allowance. On death it would be 100,000 euros. So arrange any transfer back through a contractual right to reclaim, not as a new gift.

As of October 2026 the allowances have been unchanged since 2010. The Federal Constitutional Court has scheduled oral hearings on inheritance tax for 12 and 13 October 2026; no reform has been passed.

Which value does the tax office use?

Not the value you have in mind, but a value calculated under the Valuation Act (BewG). Since 2023 these values have come out noticeably higher than before. If the actual market value is lower, you can prove it with an expert valuation or a recent sale price (§ 198 BewG).

In Dresden it is worth looking at the valuation board's data and getting your own property valuation first, especially when the value is close to the allowance.

No real estate transfer tax within the family

The gift itself is exempt from real estate transfer tax (§ 3 No. 2 GrEStG). Between parents and children, grandparents and grandchildren this also applies if the child pays something or takes over a loan, because relatives in direct line and their spouses are exempt (§ 3 No. 6 GrEStG). This includes children-in-law. For siblings, nieces or nephews, however, Saxony's real estate transfer tax of 5.5 percent is due on the part that is paid for.

The three ten-year periods

There are three periods, they do not always start on the same day, and a reserved usufruct affects each one differently.

Period	What it is about	When it starts	Effect of a reserved usufruct
Gift tax (§ 14 ErbStG)	The allowance becomes available again	With the gift	Runs anyway
Reclaim in case of impoverishment (§§ 528, 529 BGB)	Parents or the social welfare office reclaim the gift	With the gift	Runs anyway
Supplementary compulsory share (§ 2325 BGB)	Siblings demand compensation	Only once you no longer use the house either	As a rule does not start

The compulsory share period reduces the siblings' claim by one tenth per year. If you reserve the usufruct over the whole house, it does not start at all according to the case law of the Federal Court of Justice (BGHZ 125, 395). For gifts to a spouse it does not start before the marriage ends.

How the usufruct is valued for tax purposes and how much gift tax it saves is worked through with a Dresden example in my guide on usufruct on a property.

What belongs in the transfer contract

Beyond the gift itself, a transfer contract settles who keeps what. These are the points I go through with owners before they see the notary.

Securing your home

Usufruct (you may use and let the property) or a right of residence (you may live there yourself), each registered in the land register.

Rights to reclaim

For the case that the child sells or encumbers the house without consent, becomes insolvent, dies before you or divorces. Without a contract clause these rights do not exist.

Set-off and equalisation

Should the gift count towards the compulsory share or the share of the estate? That only works if you decide it at the time of the gift.

Debts and equalisation payments

If the child takes over a loan or pays something to siblings, the gift partly becomes a purchase. That affects the speculation period.

Care

A child's obligation to provide care sounds caring. It must be concrete and realistic, though, otherwise the dispute starts exactly when care is needed.

What happens if the child wants to sell later?

With a pure gift the child takes over the parents' acquisition date (§ 23 (1) sentence 3 EStG). If the parents bought the house more than ten years ago, a later sale is tax-free. But if the child takes over a loan or pays compensation to siblings, that part counts as a new purchase with its own ten-year period.

Whether a sale would be taxable in that case is shown by the speculation tax calculator.

A reserved usufruct makes a sale harder. Hardly any owner-occupier buys a house that someone else may live in for life. If you already know that your children will not live in the house themselves, check whether selling and then gifting the money would be simpler.

Notary and costs

Gifting land must be notarised, just like a purchase contract. Notary and land register fees are based on the market value of the property; encumbrances and reserved rights such as a usufruct are usually not deducted (§ 38 GNotKG).

How the notarisation works is described in the guide to notarisation when selling a property.

You can compare the tax on death with the inheritance tax calculator.

Planning a transfer? Know the value first

Tax and inheritance questions are settled bindingly by your notary and tax adviser. We determine the property value that every one of these calculations starts from, for houses and flats in Dresden and the surrounding area. Reachable by phone Mon to Fri 8am to 8pm, Sat 9am to 2pm.

Have the value assessed

Owner & Property Adviser

Calvin Linke

Dresden local expert — with many years of experience supporting property acquisitions and brokerage in the Elbe valley.

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Can my children evict me after I transfer the house?

Only if the contract allows it. If you have a usufruct or a right of residence entered in the land register, you may stay, even if your child sells the house or becomes insolvent. Without a registered right, after the transfer you are legally a guest in your own home. That is why this protection belongs in every transfer contract where the parents want to keep living there.

What happens to the gift if I have to move into a care home within ten years?

If your pension and assets no longer cover your own maintenance, you can reclaim the gift under § 528 BGB. If the social welfare office pays the care home costs, it pursues this claim against your child. The child can usually avoid returning the house by paying the missing maintenance month by month, up to the value of the gift. Only ten years after the gift does this end (§ 529 BGB).

Do I have to compensate my other children if one gets the house?

Only if you specify it when making the gift. Setting the gift off against the compulsory share under § 2315 BGB only works if you order it before or at the time of the gift; it cannot be added later. Without such a provision your other children may have a supplementary compulsory share claim on your death, which under § 2325 BGB falls by one tenth each year. This belongs in the notarial contract, not in a later will.

Can I transfer the house directly to my grandchildren?

Yes. Grandchildren have their own allowance of 200,000 euros per grandparent; if their parent has already died, it is 400,000 euros. No real estate transfer tax is due here either. Your own children's allowance stays untouched and can be used for other assets. For minor grandchildren the transfer may, depending on how it is structured, need a supplementary guardian and approval by the family court; the notary will clarify this.

Gifting your house to your children: allowances, tax and the three ten-year periods