1. Status Quo – Where Do We Stand Today?
Since 2009, the exemption thresholds for inheritance and gift tax have remained unchanged: €500,000 for spouses, €400,000 for children. In the meantime, property values in many regions have multiplied. As a result, even average estates often exceed these allowances.
On top of this: since January 1, 2023, stricter valuation rules for real estate have applied under the Annual Tax Act 2022. Whether using the asset value or income approach, the results are now much closer to market values. In practice, this means a higher taxable base — and therefore a noticeably heavier tax burden.
2. Reform Plans and Political Debate
The political positions are well known: the SPD and the Greens call for a heavier taxation of large fortunes, while the CDU/CSU advocates for higher allowances. Bavaria has officially proposed a doubling of the exemption thresholds. Which path will prevail is currently unclear — but what is certain is that the issue is firmly on the political agenda.
3. Opportunities of a 2025/26 Reform
Positive aspects could lie in a possible adjustment of the exemption thresholds or in the already adopted new deferral rules for residential property starting in 2025. But waiting for these changes would be risky.
4. Risks and Potential Tightening
At the heart of the reform debate is a further tightening of valuation rules, especially for real estate and business assets, and a potential increase in tax rates.
Particularly in the real estate sector, it is becoming clear that the state increasingly relies on realistic, market-oriented valuation methods. The result: taxable values rise, while exemption thresholds have remained unchanged for 15 years. Families with property holdings will therefore fall into tax liability even more quickly in the future.
At the same time, this creates current opportunities for succession planning. On request, a lower market value may be used as the valuation basis for inheritance and gift tax, provided that it is substantiated with an independent appraisal.
5. Why Act Now?
The current market environment offers a rare opportunity: in many regions, property market values have fallen or at least stabilized. At the same time, these market values are often lower than the tax values determined under the Valuation Act.
Because lower market values reduce the taxable base, this current valuation gap between market value and tax value works to the advantage of donors.
Rising property values in the future would threaten this structuring opportunity. In addition, further tightening of valuation rules is to be expected.
6. Practical Recommendations
- Bring forward property transfers:
Those planning to transfer real estate to children or grandchildren should not delay. Any transfer before new legislation or rising market values secures today’s favorable valuation standards. - Make full use of exemptions:
Early gifts allow exemptions to be used multiple times in 10-year cycles. - Reserve usufruct and residential rights:
This secures the donor’s financial stability while significantly reducing tax burdens. - Use family companies:
Transfers into a family pool (e.g., GmbH & Co. KG) help preserve wealth cohesion and offer tax advantages.
Conclusion
The planned inheritance tax reform 2025/26 offers some opportunities — but above all, risks. Higher taxable valuations with unchanged allowances would burden many heirs even more. Those who act now can benefit twice: from today’s comparatively favorable property values and from the still existing structuring options in tax law.
Now is the right time to set the course for tax-optimized succession planning.
