Calculating a right of residence: tax value for German gift tax

What is the mother's right of residence worth for tax purposes?

The right of residence (Wohnungsrecht) is a limited personal servitude (beschränkte persönliche Dienstbarkeit): the right to use a building or part of a building as a home to the exclusion of the owner (§ 1093 para. 1 BGB). It is not transferable; its exercise may be left to another person only if this is permitted (§ 1092 para. 1 BGB). It ends on the death of the entitled person (§ 1090 para. 2 in conjunction with § 1061 BGB). Under these provisions, the daughter's death does not end it.

Because the right is tied to the mother's life, it is valued as a lifelong use. The valuation follows Part One of the German Valuation Act (§ 12 para. 1 ErbStG). The capital value is therefore a multiple of the annual value (§ 14 para. 1 sentence 1 BewG):

Capital value K = annual value J × multiplier V

Unlike usufruct (Nießbrauch), which the usufruct calculation covers, this is about residential use. How a right of residence agreed only under the law of obligations is to be valued is not covered by this article.

Your takeaway: Check in the draft contract whether a right of residence in rem under § 1093 BGB over the whole house is provided for. The following calculation is based on that.

How high is the annual value in the family case?

A home is a use that does not consist of money. It is to be valued at the usual average prices at the place of consumption (§ 15 para. 2 BewG). The example assumes that the whole house could be let at the local rate for 1,600 EUR per month:

• Annual value J = 1,600 EUR × 12 = 19,200 EUR

Whether this means the net rent (Kaltmiete) or the rent including heating and service charges (Warmmiete), and how agreements on bearing costs affect it, is not expressly regulated by the wording.

The cap under § 16 BewG. When determining the capital value, the annual value may not exceed the amount obtained by dividing the value to be applied for the used asset under the provisions of the Valuation Act by 18.6. The provision caps only the annual value, not the actually customary rent. Assuming the relevant value is the assessed real-property value (Grundbesitzwert) of 720,000 EUR:

• Cap: 720,000 EUR ÷ 18.6 = 38,709.68 EUR
• The assumed 19,200 EUR is below that and is not reduced.
• The cap would only apply if the relevant value were below 357,120 EUR (19,200 EUR × 18.6).

Arithmetically, it follows: in the calculation under § 14 para. 1 BewG, the capital value amounts to at most the relevant value × V ÷ 18.6. Separate rules apply to a proven different fair market value and to fixed-term rights (see special cases).

Your takeaway: Have the local rental value documented and compare it with the value of the house divided by 18.6. In expensive locations with a low tax value, the cap can be decisive.

Florian Enders on the tax value of a lifelong right of residence

Where does the multiplier come from, and why is there no figure here?

Under § 14 para. 1 BewG, the following applies to the multiplier:

• It is determined from the life table of the Federal Statistical Office and applied from 1 January of the calendar year following publication of the life table (sentence 2).
• The capital value is calculated at an interest rate of 5.5 percent as the mean between the capital value for annual payments in advance and annual payments in arrears (sentence 3).
• The Federal Ministry of Finance compiles the multipliers by age and sex in a table and publishes it in the Federal Tax Gazette (sentence 4).

For the mother, what matters is the value for a woman of her age. Real property is valued as of the valuation date, for which § 12 para. 3 ErbStG refers to § 11 ErbStG. The text of that provision was not evaluated for this article. Which day is the valuation date for a gift of land, and whether it coincides with the day of notarisation, therefore remains an open question. Because new multipliers each apply from a 1 January, this question can decide the applicable table and the relevant age for a gift around the turn of the year.

No BMF table with a citation was evaluated for this article. V therefore remains a variable, and the capital value in the example is:

• K = 19,200 EUR × V

Your takeaway: Clarify which day is the valuation date in your case, and ask for the multiplier together with the citation of the BMF table in the Federal Tax Gazette that applies on that date.

Does the right of residence reduce the daughter's gift tax?

Gifts inter vivos are subject to gift tax (§ 1 para. 1 no. 2 ErbStG). A gift is any gratuitous transfer inter vivos to the extent that the recipient is enriched by it at the expense of the donor (§ 7 para. 1 no. 1 ErbStG). The taxable acquisition is the recipient's enrichment, insofar as it is not tax-exempt (§ 10 para. 1 sentence 1 ErbStG). Real property is included at the value assessed as of the valuation date under § 151 para. 1 sentence 1 no. 1 BewG (§ 12 para. 3 ErbStG).

Open question: Whether and how the capital value of the right of residence reduces the daughter's enrichment is not expressly regulated by the wording. If property-related encumbrances have already had an effect when determining the fair market value of the real property, their deduction is excluded (§ 10 para. 6b ErbStG). The table therefore shows two variants. Both assume that the right of residence has not had an effect on the assessed real-property value. The case under § 10 para. 6b ErbStG, in which the encumbrance is already reflected in the value, is not represented by these figures.

Assumptions: assessed real-property value 720,000 EUR; mother and daughter have their residence (Wohnsitz) in Germany and are therefore subject to unlimited tax liability (§ 2 para. 1 no. 1 ErbStG); the daughter, as a child, belongs to tax class I (§ 15 para. 1 ErbStG); no prior acquisitions from the mother within ten years (§ 14 ErbStG); no further encumbrances, consideration or exemptions; the daughter pays the tax herself. If the mother pays the tax, the acquisition is aggregated with the tax calculated on it (§ 10 para. 2 ErbStG).

How the 43,000 EUR arises: 320,000 EUR × 15 percent gives 48,000 EUR. Had the acquisition not exceeded the 300,000 EUR threshold, the tax would have been 300,000 EUR × 11 percent = 33,000 EUR. At a tax rate of up to 30 percent, the difference of 15,000 EUR is levied only to the extent it can be covered from half of the amount exceeding the threshold, here half of 20,000 EUR, i.e. 10,000 EUR. Tax: 33,000 EUR plus 10,000 EUR = 43,000 EUR.

This article does not confirm which variant applies. The difference between the two columns is a calculated result, not a promise of a saving.

Your takeaway: Until this is clarified, calculate with both variants and plan your liquidity for the variant without deduction.

Step by step: how to calculate the tax value

1. Define the right. Right of residence in rem, whole house or part, lifelong or fixed-term, one or more entitled persons.
2. Clarify the real-property value. The decisive value is the value separately assessed as of the valuation date (§ 12 para. 3 ErbStG, § 151 para. 1 sentence 1 no. 1 BewG).
3. Set the annual value. Usual average prices at the place of consumption for the residential use (§ 15 para. 2 BewG).
4. Check the cap. At most the value to be applied divided by 18.6 (§ 16 BewG).
5. Determine the multiplier. From the BMF table applicable on the valuation date, by age and sex; for several entitled persons under § 14 para. 3 BewG, for a fixed term under § 13 para. 1 BewG.
6. Calculate the capital value. Annual value × multiplier; check a demonstrably different fair market value under § 14 para. 4 BewG.
7. Calculate the tax in both variants. Deduct the allowance, round down to the full 100 EUR, apply the tax rate and check hardship relief at every threshold exceeded.

Your takeaway: With steps 1 to 4, you can make a provisional estimate of the annual value and the cap before the notary appointment. The calculation only becomes binding with the assessed real-property value; whether this is the reference value under § 16 BewG remains open.

Special cases: partial right of residence, two entitled persons, fixed term, different value

Right of residence over only part of the house

The right of residence can be limited to part of the building (§ 1093 para. 1 BGB). In that case, the entitled person may share the facilities and installations intended for the common use of the residents (§ 1093 para. 3 BGB). Which value is then decisive for the annual value and as the reference value of the cap under § 16 BewG, and whether the shared use is included, remains open.

Two entitled persons

Had both parents reserved the right of residence, § 14 para. 3 BewG applies: if the right ends on the death of the last to die, the age and sex of the person with the highest multiplier are decisive. If it ends on the death of the first to die, the person with the lowest multiplier counts.

Fixed-term right of residence

If the right is limited to a certain period, it is to be valued at the multiple of the annual value taken from Annex 9a to the Valuation Act. If the duration additionally depends on the life of one or more persons, the capital value calculated under § 14 BewG may not be exceeded (§ 13 para. 1 BewG). The factors in Annex 9a were not evaluated for this article.

Proof of a different value

If the fair market value of the total uses is demonstrably lower or higher, the proven value is to be used (§ 14 para. 4 sentence 1 BewG). However, a different value cannot be based on the expectation of a shorter or longer lifespan, an interest rate other than 5.5 percent or a payment pattern other than mid-period payment (sentence 2). For fixed-term rights, § 13 para. 3 BewG contains a corresponding rule without the lifespan.

Your takeaway: Define the scope, duration and number of entitled persons clearly in the contract; each of these details changes the calculation.

What applies if the mother dies early?

§ 14 para. 2 BewG provides for a correction if a use valued as lifelong has existed only for a short time and its cessation is due to the death of the entitled or obligated person. The maximum duration depends on age. For a 70-year-old, the wording allows two brackets: "over 65 years up to 70 years" not more than 6 years (no. 5), or "over 70 years up to 75 years" not more than 5 years (no. 6). Which bracket applies depends on how age is determined and remains open.

For application and deadline, the wording makes the perspective decisive:

• Sentences 1 and 2: The assessment of taxes that are not assessed on a recurring basis is to be corrected upon application according to the actual duration. § 5 para. 2 sentence 2 BewG applies accordingly; under it, the application must be filed by the end of the year following the occurrence of the condition.
• Sentence 3: Where a burden has ceased, the correction does not require an application.

For the daughter, the right of residence is a burden. If it ceases because of the mother's early death, the correction requires no application under sentence 3. This matters only in the variant with deduction: only there has the capital value reduced the tax. In the variant without deduction, there is no deducted value that would need correcting. How the correction according to the actual duration is implemented arithmetically is not regulated in detail by the wording.

Your takeaway: Keep the tax assessment notice and the calculation of the capital value. If the capital value was deducted, you must expect a correction after an early death.

What this article does not calculate

The tax value for gift tax purposes is not automatically the value in other contexts. This article calculates nothing for the compulsory share supplement (Pflichtteilsergänzung), equalisation of accrued gains (Zugewinnausgleich), social assistance, a buy-out or a waiver; these questions remain open. Income tax, real estate transfer tax and foreign law are also excluded.

• Structuring the transfer, deadlines and risks: Transferring a house with a lifelong right of residence
• Stay in a care home, cancellation and waiver: Right of residence and care home
• All articles on transferring a property: Topic page: transferring a house

Your takeaway: Use the calculation in this article only for gift tax.

Frequently asked questions

Can I read off the multiplier for a 70-year-old woman here?

No. The multiplier comes from the BMF table applicable on the valuation date and published in the Federal Tax Gazette (§ 14 para. 1 BewG). This table was not evaluated here, so the article calculates with V as a variable.

Does the annual value use the net rent or the rent including heating and service charges?

The law refers to the usual average prices at the place of consumption (§ 15 para. 2 BewG). Whether this means net rent (Kaltmiete) or rent including heating and service charges (Warmmiete), and how cost agreements affect it, is not expressly regulated by the wording. Clarify this point with your advisers.

Does a shorter life expectancy reduce the value of the right of residence?

No. A different value cannot be based on the expectation of a shorter or longer lifespan (§ 14 para. 4 sentence 2 BewG). Proof of a different fair market value and the correction under § 14 para. 2 BewG in case of early death remain unaffected.

Does the daughter have to file an application after the mother's early death?

Where a burden has ceased, the correction does not require an application according to the wording (§ 14 para. 2 sentence 3 BewG). For the daughter, the right of residence is a burden, but this only becomes relevant if the capital value was deducted.

Does the cap under § 16 BewG apply to every house?

No. It caps the annual value only if that value is higher than the value to be applied for the house divided by 18.6. Assuming that the assessed real-property value of 720,000 EUR is the relevant value, the cap in the example would be 38,709.68 EUR and therefore above the annual value of 19,200 EUR.

Your next steps

• Transferring a house: the main guide: the steps from planning to registration
• Book an initial consultation: if you would like the tax value of the right of residence assessed for your family

Sources, assumptions and limits of this article

Assumptions of the example: widowed mother, 70 years old, lifelong right of residence in rem over the whole single-family house; assessed real-property value 720,000 EUR, which is also assumed to be the reference value under § 16 BewG; local rental value 1,600 EUR per month; both have their residence in Germany; no prior acquisitions within ten years; no further encumbrances, consideration or exemptions; the right of residence has not had an effect on the real-property value; the daughter pays the tax. All figures are fictitious.

Deliberately left open: the multiplier V and the citation of the BMF table; which day is the valuation date for the gift of land; the factors in Annex 9a; whether and how the capital value is deducted and when § 10 para. 6b ErbStG applies; the reference value under § 16 BewG, including for a partial right of residence and with shared use under § 1093 para. 3 BGB; net or gross rent for the annual value; the mother's age bracket under § 14 para. 2 BewG; how the correction according to the actual duration is calculated; the valuation of a right of residence agreed only under the law of obligations; the value in other areas of law. Case law was not evaluated for this article.

Statutory texts (German), retrieved on 30 October 2026 from gesetze-im-internet.de:

• § 1061 BGB, Death of the usufructuary
• § 1090 BGB, Statutory content of the limited personal servitude
• § 1092 BGB, Non-transferability; leaving the exercise to others
• § 1093 BGB, Right of residence
• § 5 BewG, Acquisition subject to a condition subsequent
• § 13 BewG, Capital value of recurring uses and payments
• § 14 BewG, Lifelong uses and payments
• § 15 BewG, Annual value of uses and payments
• § 16 BewG, Cap on the annual value of uses
• § 151 BewG, Separate assessments
• § 1 ErbStG, Taxable events
• § 2 ErbStG, Personal tax liability
• § 7 ErbStG, Gifts inter vivos
• § 10 ErbStG, Taxable acquisition
• § 12 ErbStG, Valuation
• § 14 ErbStG, Consideration of prior acquisitions
• § 15 ErbStG, Tax classes
• § 16 ErbStG, Allowances
• § 19 ErbStG, Tax rates

This article is general information based on the statutory texts cited. It does not replace individual legal or tax advice on your contract and your figures.