Binding Property Valuation for Gift Tax: BFH Emphasizes the Need to Object Promptly

When the tax office determines the value of a property for gift tax purposes, it is in the donee’s best interest to object immediately if they consider the valuation to be excessive. The Federal Finance Court (BFH) has clarified in a judgment: For subsequent gifts within the ten-year accumulation period, the initially determined value will be applied without deviation.

The case in question involves a son who received a part-ownership share in a property from his father in 2012. The tax office assessed the value of the property at just under 90,000 euros—below the tax exemption limit for children, resulting in no gift tax. However, during another gift in 2017 worth 400,000 euros, the donee found himself facing gift tax liabilities. The tax office combined both gifts in accordance with § 14 Abs. 1 ErbStG (Inheritance Tax Act) and calculated the tax burden, including the previously determined property value.

When the son claimed that the original value was set too high, he encountered legal resistance. Both the finance court and the BFH denied a retrospective correction of the property value (judgment of 26.07.2023 – II R 35/21). The once-determined value for properties is to be set specifically for gift tax purposes and is binding for all subsequent gift tax assessments within the ten-year period.

The lesson from this judgment: If the taxpayer does not immediately contest the valuation and the decision becomes final, a later challenge to the incorrectness of the property value in gift tax assessments is futile.