Parents who pass a property on to their children or grandchildren during their lifetime often want to keep living in it or keep the rental income. German law makes this possible with a reserved usufruct (Nießbrauch) or a right of residence (Wohnrecht). For the tax office, such a right has its own value, and that value reduces the value of the gift. The German Valuation Act (BewG) sets out fairly precisely how high it is. This guide explains step by step how to calculate a usufruct, which multipliers apply from 2026 and how this affects gift tax.
You can follow every step with your own figures in the Usufruct Value Calculator. The results are a non-binding estimate and do not replace tax advice.
What is a usufruct, and what is a right of residence?
The usufruct is governed by the German Civil Code. The beneficiary may use the property comprehensively: live in it, let it and keep the rent. In return, they usually bear the ordinary costs such as routine maintenance and property tax. The recipient of the gift, however, is already the owner.
The right of residence is narrower. The beneficiary may live in certain rooms or the whole house themselves; letting to third parties is not intended unless specifically agreed. Both rights end at the latest when the beneficiary dies and are entered in the land register. The valuation method is the same for both; only the annual value differs.
The basic formula: annual value times multiplier
Under § 14(1) BewG, the capital value of lifelong uses is a multiple of the annual value. The formula is therefore:
Capital value = annual value × multiplier
The annual value is the economic benefit for one year. For an owner-occupied house, that is the local net rent saved; for let flats, it is the net yield, i.e. rental income minus the costs the beneficiary bears. The multiplier reflects how long the right is expected to last and the fact that future payments are worth less today.
Where do the multipliers come from?
The law requires the multipliers to be derived from the current life table of the Federal Statistical Office using an interest rate of 5.5 percent. The Federal Ministry of Finance publishes a table by age and sex every year. For valuation dates from 1 January 2026, the ministry's letter of 21 October 2025 applies. It is based on the life table 2022/2024, published on 22 July 2025.
Some values from this table:
1. Age 50: men 14.977, women 15.711
2. Age 60: men 12.798, women 13.832
3. Age 65: men 11.444, women 12.583
4. Age 70: men 9.938, women 11.107
5. Age 75: men 8.282, women 9.393
6. Age 80: men 6.509, women 7.490
7. Age 85: men 4.743, women 5.512
What counts is the age in completed years on the valuation date, i.e. the day of the gift. Because of their higher life expectancy, women have higher multipliers throughout. The younger the beneficiary, the more valuable the right.
The cap under § 16 BewG
To ensure that a right of use is never worth more than the property on paper, § 16 BewG caps the annual value. It may be at most the property's value under the Valuation Act divided by 18.6. With a property tax value of €250,000, the limit is about €13,441 per year. Anyone who actually earns €24,000 in rent per year may still only use this maximum for the valuation.
The cap mainly affects properties with a high rental yield relative to their tax value, such as older apartment buildings in inexpensive locations. The calculator checks the limit automatically and shows whether it applies.
Worked example: a mother transfers her house to her daughter
A 72-year-old mother gives her daughter a detached house with a property tax value of €520,000. She reserves a lifelong usufruct and keeps living in the house. The local net rent is €1,100 per month.
1. Annual value: 12 × €1,100 = €13,200
2. Maximum under § 16 BewG: €520,000 ÷ 18.6 = €27,957; the cap does not apply
3. Multiplier, woman aged 72: 10.447
4. Capital value: €13,200 × 10.447 = €137,900
5. Value of the gift: €520,000 − €137,900 = €382,100
At €382,100, the acquisition stays below the €400,000 allowance for children. No gift tax is due. Without the reservation, the acquisition would exceed the allowance by €120,000; at 11% that would be €13,200 in tax.
Fixed-term rights under Annex 9a
Not every right is lifelong. If a usufruct is granted for ten years, for example, § 13 BewG applies with the multiplier from Annex 9a. For ten years it is 7.745, for 20 years 12.279. But because a person's usufruct or right of residence ends at death at the latest, § 13(1) sentence 2 BewG says the value may not exceed the lifelong value. For very old beneficiaries, the lifelong multiplier therefore often applies. More on this in the article Fixed-Term Usufruct and the Cap.
What happens if the beneficiary dies early?
The multiplier assumes an average lifespan. If the beneficiary dies much earlier, the deduction would have been too high. That is why § 14(2) BewG allows a correction based on the actual duration, but only within fixed periods. For an age of over 70 to 75 on the valuation date, the period is 5 years; for over 65 to 70, it is 6 years. The correction is made on application; for the recipient it usually means additional tax, because a smaller capital value is deducted retrospectively.
Usufruct and gift tax together
Under § 10(1) ErbStG, the taxable amount is the recipient's enrichment. Anyone receiving a property encumbered with a usufruct is enriched by less, namely by the capital value. Two special rules are worth knowing:
1. If the property is let for residential purposes, 10% of its value is exempt under § 13d ErbStG. Burdens connected with the exempt portion are not deductible under § 10(6a) ErbStG. The capital value then only counts at 90%.
2. If the usufruct has already reduced the property's tax value, for example because an appraisal proves the lower value, a second deduction is excluded under § 10(6b) ErbStG.
Allowances and rates depend on the relationship. Children have a €400,000 allowance, grandchildren €200,000, siblings, nieces and nephews only €20,000. Details and comparisons are available in the Inheritance Tax Calculator.
Several beneficiaries
If both parents reserve the usufruct jointly, its duration depends on two lives. If the right only ends when the survivor dies, § 14(3) BewG uses the higher of the two multipliers. If it ends at the first death, the lower one applies. In practice, the usufruct is often arranged so that it continues for the surviving parent. You can approximate this in the calculator by entering the parent with the higher multiplier.
Typical calculation mistakes
1. Gross rent instead of net rent: service charges do not count as a benefit, as the occupant pays them anyway.
2. Wrong table: gifts made in 2025 use the 2025 table, not the 2026 one. The valuation date decides.
3. Market value instead of tax value: the § 16 BewG cap and the value of the gift refer to the property tax value under the Valuation Act.
4. Forgotten costs: if the beneficiary bears maintenance or property tax, these costs reduce the annual value. You can estimate property tax with the Property Tax Calculator.
Conclusion
Calculating a usufruct with the official tables is not rocket science: determine the annual value, cap it under § 16 BewG if necessary, and multiply by the multiplier for age and sex. The result reduces the value of the gift and can bring the tax down to zero. For the actual transfer, however, a notarial deed, the land register entry and often tax advice are advisable. Try different scenarios in the Usufruct Value Calculator before your consultation.