A woman is allowed to live in her partner's house for life after his death for €500 per month. The inspector classifies this rental right as a notional inheritance and imposes an inheritance tax assessment. The woman considers the valuation too high. According to her, the calculation should take into account future rent increases as well as the fact that the rental right expires when she moves out.
Lifetime housing rights for a pittance
A husband and wife are in an affectionate relationship but are not married and do not have a cohabitation contract. The man owns a property through his limited company. In 2007, they sign a declaration that if the husband dies, the wife may stay in the property for life for €500 per month. The rent is not subject to increases, but may be indexed. The husband dies in 2021. The wife is not in his will. The inspector regards the rental declaration as a gift under condition precedent. Now that the husband has died, the condition is fulfilled. The gift is therefore treated as a notional acquisition under inheritance law.
How do you value such a right?
The value of the rental right is calculated as a usufruct. The inspector assumes a fixed rent of €6,000 per year. The woman argues that indexation should be taken into account. Due to the indexation option, the annual rent is uncertain. Based on average inflation over the past 10 years, she arrives at an estimated average of €6,942 per year. The court follows her. A reasonable interpretation of the law entails taking into account the estimated average annual amount, including indexation, in the valuation.
Moving means end of tenancy rights
The woman additionally argues that the tenancy right is worth less because it expires as soon as she moves somewhere else. This is called a subterfuge clause. The court agrees. It follows from the rental declaration that the basically lifelong rental right ends when the woman moves out. This is a value-pressing factor. Following previous case law, the court sets the depreciation at 25%. It does not matter that this is a personal right and not a right in rem such as usufruct.