Spouses who each own half of their home usually assume that the survivor will take over the family home tax-free in the event of inheritance. That's true - but only if you then live in the property yourself for ten years. A design developed in notarial practice, the so-called cross donation, avoids this binding. However, the higher regional courts have different opinions on whether the land registry office has to register it: the Dresden Higher Regional Court ordered the entry in a decision of July 7, 2025 (ref. 17 W 428/25), while the Celle Higher Regional Court rejected it in a ruling of August 18, 2026 (ref. 20 W 31/26). The legal complaint is pending at the Federal Court of Justice under case number V ZB 65/26.
The problem: the retention period when purchasing a property upon death
The inheritance tax law favors the family home between spouses in two ways - with one crucial difference:
- Gift during your lifetime (Section 13 Para. 1 No. 4a ErbStG): Tax-free, without value limit, without area limit and without retention period.
- Acquisition of Due to death (Section 13 Para. 1 No. 4b ErbStG): Also tax-free, but only if the surviving spouse lives in the property themselves for ten years. If he moves out earlier, rents out or sells, the exemption no longer applies retroactively.
The exception for “compelling reasons” (which enable an early move out in a tax-neutral manner) is interpreted narrowly by tax authorities and case law. The desire for a smaller apartment, moving closer to the children or selling for economic reasons are usually not enough. Especially with valuable properties and older spouses, the retention period becomes a real planning risk.
The solution: cross-gifting the family home
The design begins during the survivor's lifetime and shifts the survivor's acquisition from the facts of No. 4b to No. 4a:
- Both spouses transfer their half share of co-ownership to each other. Every purchase is a tax-free donation according to No. 4a - without a retention period.
- Every seller reserves the right to reclaim the money in the event that the purchaser predeceases him. The claim is secured by a notice of transfer of the transferred share.
- If a spouse dies, the survivor keeps the half he already received during his lifetime and demands his own former half back. This reacquisition is tax neutral according to Section 29 Paragraph 1 No. 1 ErbStG.
- Result: The survivor is the sole owner without there being an acquisition according to No. 4b. He can sell the property or move out at any time.
The trick is in the symmetry. Because no one knows who will die first, a one-sided transmission is not sufficient. Only the exchange protects both spouses, regardless of the order of death. Real estate transfer tax is not due between spouses (§ 3 No. 4 GrEStG).
At first glance, the whole thing seems like a dead end: before and after the contract, both spouses are listed in the land register with ½ each. This is exactly what sparks the argument.
The case before the Dresden Higher Regional Court: The land registry examines law, not sense
The spouses were each registered half as co-owners and transferred their shares to each other, combined with rights of reclaim and notices of conveyance. The tax objective was openly stated in the contract. The land registry office rejected the application: the entry was identical to the previous land register contents, there was no need for legal protection.
The Dresden Higher Regional Court (ZEV 2025, 816 = DNotZ 2025, 922) overturned the decision and was essentially based on the following arguments:
- Constitutive effect of the entry: According to Section 873 of the German Civil Code (BGB), the agreed transfer only becomes effective upon entry. Anyone who has effectively abandoned the property therefore has a legal interest in ensuring that the legal change occurs.
- No review of expediency: The land registry office does not have to question how sensible a legal transaction is and what motives the parties involved have. What is substantively permissible must be stated in the land register.
- Changed legal situation: After completion, the shares are subject to reassignment notices. Whether the tax expectations pan out is irrelevant to the land register procedure.
The decision was welcomed in design practice. Two entries, each of which would be undisputedly admissible, cannot be rejected solely because they are applied for at the same time.
The opposing position of the Celle Higher Regional Court: Same land register status, no need for legal protection
The Higher Regional Court of Celle had an almost identical contract before it: mutual transfer of the halves, right of reclaim in the event of the purchaser's pre-death, secured by reservations, otherwise free of charge by way of anticipated succession. The Hanover land registry rejected the applications, the Higher Regional Court confirmed this and expressly opposed Dresden.
The Senate admits that co-ownership shares can also be transferred between co-owners. However, he denies the need for legal protection:
- No change in the legal situation: Co-ownership shares are ideal, purely mathematical quantities. After the exchange, both spouses are registered as before at ½ each.
- Sense and purpose of Section 47 Paragraph 1 GBO: The land register announces fractions and their changes. An entry that re-announces an identical status in terms of content is superfluous.
- Reservations do not change anything: The fact that the shares would then be encumbered does not stand in the way of rejection - the Senate does not give any further justification for this.
A detailed note at the end is noticeable: The OLG leaves it open whether there is also an abuse of legal design options according to Section 42 AO open, but suggests that the design only serves to circumvent the retention period. The appeal was admitted due to its fundamental importance and diverging case law.
Criticism of the Celle decision – and what follows from it
The Celle view has an intuitive strength: at the end the land register says ½ twice, as before. However, it is not legally convincing.
Each co-ownership share is an independent right that its owner can freely dispose of in accordance with Section 747 Sentence 1 of the German Civil Code (BGB). This becomes apparent at the latest when there are different burdens: If a share is encumbered with a mortgage, the burden moves to the other spouse when the share is exchanged. With unencumbered shares, the change is less visible, but legally the same. In addition, the contents of the land register actually change - due to the new basis for entry in Division I and the reservations in Division II. A reservation for reassignment only makes sense if the share has previously changed hands.
Section 47 GBO does not support the result either. The regulation regulates how a community is to be registered; it is regulatory law with a serving function compared to substantive law. In land register proceedings, the need for legal protection usually follows from the right to apply and is only missing in exceptional cases. An entry on which the effectiveness of a decree depends is not superfluous - without it, those involved remain bound to a conveyance that they can never carry out.
The reference to Section 42 AO does not belong in the land register procedure. The regulation does not make a legal transaction ineffective, but only determines how taxation is to be carried out - this is decided by the tax office and the tax court, not the judicial officer. In fact, the allegation of abuse is by no means compelling: the legislature deliberately designed the lifetime benefit without a retention period, and § 29 ErbStG expressly recognizes rights to reclaim. In addition, the design protects the survivor regardless of the will and inheritance.
A sober look at the risk is crucial for the advice: If Section 42 AO does apply, the survivor will be taxed as if he had inherited according to No. 4b. It is then essentially where it would be without the design - burdened with the costs. So the risk is limited, the opportunity is considerable.
What does this mean in practice?
District decides - until Karlsruhe speaks. In the district of the OLG Celle, a rejection is currently to be expected, in the district of the OLG Dresden an entry; elsewhere the situation is open. A brief consultation with the responsible land registry office before certification saves interim orders and costs.
Link applications. According to Section 16 Paragraph 2 GBO, ownership transfers and reassignment notices should only be carried out together. Reservations without a change of share make no sense.
Ensure family home properties. The property must be used for your own residential purposes at the time of the donation. In the case of mixed-use properties, the exemption only applies to the self-used part.
Document non-tax reasons. Protecting the survivor, regardless of the succession, should be included in the preliminary remarks of the document. If the values are high, binding information in accordance with Section 89 Paragraph 2 AO may be considered.
The two positions at a glance
| Question | OLG Dresden (17 W 428/25) | OLG Celle (20 W 31/26) |
|---|---|---|
| Need for legal protection | Yes - the entry is constitutive for the effectiveness | No - status in the land register before and identical afterwards |
| Does the legal situation change? | Yes - shares change hands and are charged with reservations | No - ½ of each remains ½ each, reservations are irrelevant |
| Checking the meaning and motive | Not the responsibility of the land registry | Design only serves tax purposes |
| § 42 AO | Irrelevant to the land register procedure | Left open, abuse indicated |
| Result | Entry must be made | Application rejected, legal appeal admitted (BGH V ZB 65/26) |
We advise you
From the perspective of notarial practice, the cross gift remains a legitimate and valuable arrangement - especially if the ten-year retention period cannot be met or you want to keep the freedom to sell or move. A clarifying decision by the Federal Court of Justice is desirable and will ensure legal certainty. Until then, we will work with you and your tax advisor to check whether the structure makes sense in your case, formulate the contract precisely and coordinate implementation with the land registry office. Please feel free to contact us - appointments are also possible at short notice with the notaries at Gänsemarkt.
