Inheriting apartment buildings in Berlin: tax exemptions for business assets

Business assets instead of private assets

Residential properties used solely for passive asset management are subject to regular inheritance tax when transferred through inheritance or gift. Sections 13a and 13b of the German Inheritance and Gift Tax Act (Erbschaftsteuer- und Schenkungsteuergesetz, ErbStG) do, however, provide relief for business assets. Under standard relief, 85 percent of qualifying assets stay tax-exempt; under optional relief, the full 100 percent.

Under certain conditions, residential property portfolios can also fall within the scope of this provision. The decisive factor under Section 13b(4)(1d) ErbStG is that the rental activity goes beyond passive capital investment and qualifies as a commercial operation. This is exactly where many owners decide whether their life's work passes to the next generation or to the tax office.

The 300-unit threshold

The frequently cited threshold of 300 residential units is not a statutory limit. It comes out of tax audit practice, where authorities tend to take a closer look from this size onwards at whether the owner's activities amount to an entrepreneurial enterprise.

Under critical review are above all the corporate structure, dedicated operational units within the business, in-house staff for property management, as well as the nature and scope of additional services such as tenant care, maintenance, or asset management. Simply holding and renting out apartments is generally not sufficient. Anyone who formally owns 350 units but has them managed by an external property management company and does nothing else will struggle to qualify for the relief.

What this means for Berlin portfolios

Based on our market data, the average transaction price for an apartment building in Berlin in 2025 was around 4.9 million euros. With a typical building size of 20 to 30 units, a portfolio reaches the 300-unit threshold at around 10 to 15 buildings, corresponding to an estimated total volume of roughly 50 to 75 million euros.

For owners in this range, the tax classification as business assets can make a substantial difference at the point of transfer, in many cases a seven-figure one. If you are considering selling an apartment building in Berlin or transferring it within the family, the inheritance-tax structuring is worth setting up early with a tax advisor, ideally before the next acquisition lands. Anyone planning to additionally buy an apartment building in Berlin should factor the later relief eligibility for the combined portfolio into the planning from day one.

Holding periods and reform debate

Anyone claiming the tax exemption under Section 13a ErbStG must continue operating the assets for at least five years after transfer, seven years under optional relief. Sales or significant structural changes within this period can cause the relief to be revoked retroactively, a real trap that we see again and again in practice.

In its 2025/2026 annual report, the Council of Economic Experts (Sachverstaendigenrat) recommended restricting the tax exemptions for business assets. No concrete legislative changes have yet been tabled, but the political debate continues, and it could noticeably shift the framework over the coming years.

Professional guidance

Classifying a residential portfolio as business assets requires tax expertise, business knowledge, and an understanding of the regulatory framework. A well-founded Berlin property valuation provides the foundation for the tax classification and for any later asset transfer.

If you want to stay informed about current conditions on the Berlin apartment building market, you will find current transaction data and price trends on our Market Intelligence platform.

This article is for general information purposes only and does not constitute tax or legal advice. The content does not replace individual consultation with a tax advisor or attorney. No liability is assumed for accuracy or completeness.