Inheritance tax

Inheritance Tax - Inheritance tax is a tax on the acquisition of assets through inheritance or bequest. It is levied under the Inheritance and Gift Tax Act (ErbStG) and particularly affects property owners, as real estate often constitutes the largest asset in an estate.

Tax Brackets and Exemptions

The amount depends on the degree of kinship and the value of the acquisition. Tax Class I: Spouses (€500,000 exemption), children (€400,000), grandchildren (€200,000), tax rates 7-30%. Tax Class II: Siblings, nieces, nephews (€20,000 exemption), rates 15-43%. Tax Class III: Non-relatives (€20,000), rates 30-50%.

Valuation of Real Estate

Real estate is valued in accordance with the Valuation Act (BewG). Since the 2022 Annual Tax Act, adjusted parameters have led to significantly higher tax values for many properties. Depending on the type of property, the market value, income value, or cost value method is used. The tax office’s valuation can be challenged through an expert appraisal.

Important: The tax office calculates the property value based on standardized parameters that do not always reflect actual market conditions. If the value determined by the tax office exceeds the actual market value-for example, because the property has defects, is rented out, or is located in a less desirable area-an appraisal prepared by a certified expert (§ 198 BewG) can be used to prove the lower market value. This appraisal must comply with the requirements of the Real Estate Valuation Ordinance (ImmoWertV).

Tax Exemption for the Family Home

If a spouse inherits the owner-occupied property, the acquisition remains completely tax-exempt-with no value limit-provided they live in it themselves for at least ten years. For children, the exemption applies up to 200 m² of living space. The tax benefit is retroactively forfeited if the property is no longer used as a primary residence within ten years. This means: Anyone who sells or rents out the inherited family home within ten years must repay the full amount of tax saved.

This ten-year period is significant in practice: Anyone who inherits a family home but must move for professional reasons may lose the tax exemption-unless there are compelling reasons (e.g., need for care). We recommend clarifying this issue with a tax advisor at an early stage.

Gifting as a Planning Tool

Since the tax-free allowances become available again every ten years, staggered gifts during one’s lifetime offer significant tax savings. An example: Parents with two children can gift up to 800,000 euros tax-free every ten years (400,000 euros per child). With timely planning, high-value real estate can also be transferred tax-free in this way.

The following points should be noted: Gifts made within ten years prior to death are counted toward the statutory share. Additionally, real estate gifts incur notary and land registry fees, and possibly real estate transfer tax if consideration is agreed upon. Reserving a right of usufruct allows you to gift a property while continuing to live in it or receive rental income.

Practical Tip for Property Owners in Nuremberg and Franconia

Due to rising property values in the metropolitan region, tax-free allowances are being exhausted more quickly. We recommend taking advantage of gifts during one’s lifetime early on-the tax-free allowances become available again every ten years. Have the tax value assessed by an expert if it exceeds the market value.

In Nuremberg and the metropolitan region, we see that many property owners put off estate tax planning. Especially for high-value properties-such as multi-family homes in the city center or larger plots of land-early estate planning can save significant taxes. We help you integrate the property-specific aspects (current market value, rental status, financing burden) into the overall tax picture.

Frequently Asked Questions

How much is the inheritance tax on a house?

Example: A child inherits a house worth 600,000 euros → after deducting the exemption (400,000 euros), 200,000 euros are taxable → tax rate 11% → 22,000 euros. If used as a family home (up to 200 m²), the tax is waived entirely.

Can I avoid the tax through a gift?

You cannot avoid it, but you can significantly reduce it. The tax-free allowances are identical and become available again every ten years. With timely planning, even high-value real estate can be transferred tax-free.

Is additional income tax due when selling an inherited house?

Yes, if the ten-year capital gains period since the decedent’s acquisition has not yet expired and the house was not owner-occupied, income tax is levied on the capital gain. The heir assumes the decedent’s holding period-so if the decedent purchased the property five years ago, five years of the capital gains period remain.

What is the difference between inheritance tax and gift tax?

Both taxes are calculated according to the same law (Inheritance Tax Act) and using the same rates and exemptions. The difference lies in the trigger: Inheritance tax arises from the opening of the estate (death of the decedent), while gift tax arises from a gift made during the donor’s lifetime. Since the tax-free allowances for gifts and inheritances are combined (on a rolling ten-year basis), all transfers are aggregated within a ten-year window.

2023 Valuation Reform and Its Consequences for Nuremberg Real Estate

The 2022 Annual Tax Act fundamentally changed the parameters for real estate valuation under inheritance and gift tax law effective January 1, 2023. Updated real value factors, increased property interest rates, and new conversion coefficients mean that the tax-assessed property value for many properties in the Nuremberg metropolitan region is 20 to 40 percent higher than it was before the reform. This has a direct impact on the tax burden: Those who were safely below the tax-free allowance before 2023 may now exceed this allowance without the property’s actual market value having increased. Owners planning a gift or inheritance should therefore be aware of their property’s current tax valuation. We recommend having this determined by a publicly appointed appraiser or a tax advisor-an appraisal pursuant to Section 198 of the Property Valuation Act (BewG) can substantiate the actual market value and correct an excessive assessment by the tax office.

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