Rental value of the retirement home: Special edition

Oct 30, 2025

When transferring an agricultural and forestry business, the transferee often assumes the notarised obligation to provide the previous owner with various types of lifetime benefits, e.g. by providing a retirement home, including the costs of benefits in kind such as heating, water, electricity, maintenance costs, etc., depending on what exactly the transferee has contractually agreed to.

In the present case, the transferee had claimed not only the expenses for benefits in kind such as the aforementioned ancillary costs as special expenses in his income tax return, but also the value in use of the retirement home.

The tax office refused to recognise the value in use. The Nuremberg Finance Court, on the other hand, did not follow the administrative opinion and ruled that not only the current material expenses are deductible as special expenses, but also the value in use. In its reasoning, the court stated that, in its opinion, the present case was comparable to a situation in which one spouse provided the other with free accommodation after a separation. In this case, the spouse could also claim the maintenance in kind granted to the separated spouse in full as special expenses in their income tax return.

The tax office has already appealed against the FG's decision to the Federal Fiscal Court. In similar cases, taxpayers should therefore seek tax advice and lodge an appeal against notices in which usage values are not recognised as special expenses.

Source: FG Nuremberg, judgment of 6 February 2025 – Ref. 4 K 1279/23