Inherited property

An estate property is a property that forms part of a deceased person’s estate and passes to the heirs. Upon the owner’s death, the land or building automatically passes to the community of heirs (Section 1922 of the German Civil Code (BGB))-the transfer of title in the land registry takes place subsequently. Inherited real estate presents heirs with particular challenges: reaching an agreement on use or sale, appraising the property, tax obligations, and-if the community is divided-legal disputes.

Options Available to Heirs

Heirs generally have three options regarding an estate property: First, personal use by one or more heirs, possibly with a compensation payment to the others. This option requires a mutual agreement on the property’s value and the payment terms.

Second, renting out the property and managing it jointly as a community of heirs-this option requires ongoing agreement and joint management. Communities of heirs acting as a group of landlords are often problematic in practice, as every decision regarding repairs, rent increases, or tenant changes requires the consent of all parties involved.

Third, the sale of the property and distribution of the proceeds according to the inheritance shares. In practice, the sale is the most common and often the simplest solution when multiple heirs are involved and none of the parties wishes to or is able to use the property themselves.

Valuation of the Inherited Property

For inheritance tax purposes, the tax office determines the property value in accordance with the Valuation Act (BewG), which is intended to correspond to the market value. In practice, however, the automatically determined tax value often deviates from the actual market value-both upward and downward. Heirs can demonstrate a lower market value through an expert appraisal and thereby reduce the inheritance tax burden.

For the distribution of the estate-that is, the agreement among the heirs regarding division or cash settlement-a market value assessment by a real estate agent or appraiser serves as a fair basis. We provide a well-founded market price assessment for communities of heirs in our region that all parties can accept as a neutral starting point.

Tax Aspects of Inherited Real Estate

Inheritance tax is levied on the value of the inherited property minus personal exemptions (spouse: 500,000 euros; children: 400,000 euros per child). When selling the inherited property, the capital gains tax holding period must be observed: If the decedent owned the property for less than 10 years, heirs may owe income tax on the profit upon sale. The decedent’s period of ownership is credited to the heirs in this context.

Properties used for personal residence are exempt from inheritance tax under certain conditions (Section 13(1)(4b) ErbStG) if the heir resides in the property for at least 10 years. Those who must move out for professional reasons do not lose the tax exemption-but those who sell or rent out the property do.

Practical Steps Following the Death of the Property Owner

Following the death of the property owner, we recommend the following procedure:

1. Apply for a certificate of inheritance at the competent local court (probate court) to be able to act on behalf of the estate before the land registry, banks, and contractual partners.
2. Clarify ongoing obligations: If the property is rented out, rental income must continue to be monitored, and ongoing costs (property tax, insurance, maintenance fees) must be paid.
3. Obtain a property valuation to establish a fair basis for the distribution of the estate.
4. Consult a tax advisor to clarify inheritance tax obligations and, if applicable, capital gains tax risks.
5. Make a joint decision on whether to sell, use the property yourself, or rent it out-the sooner, the better.

Practical Tip for Property Owners in Nuremberg and Franconia

Communities of heirs who own an inherited property in Nuremberg, Fürth, Erlangen, or the surrounding Franconian region often find themselves in an emotionally taxing situation: Grief, time pressure, and the differing interests of those involved make it difficult to make rational decisions. We help communities of heirs design a fair and efficient sales process-from determining market value and preparing the property to finding a buyer and assisting with the purchase agreement.

Please contact us early on, even if you do not yet have a certificate of inheritance. We can provide valuable support as early as the preparatory phase and structure the process so that the transition from the opening of the estate to the closing of the sale proceeds as smoothly as possible.

Frequently Asked Questions

As an heir, can I sell the inherited property immediately?

To sell the property, you need either a certificate of inheritance or a notarized will with a court-certified opening protocol as proof of your status as an heir. Only then can the notary execute the purchase agreement and the land registry transfer ownership to the buyer. However, preparations for the sale can begin while these documents are being obtained.

What happens if the community of heirs cannot agree on the sale?

In the event of a disagreement, any co-owner may request the dissolution of the community-in extreme cases, through a partition auction at the local court. Since experience shows that this typically yields a price significantly below market value, an amicable solution should be sought. We act as a neutral mediator between the parties.

How much is the inheritance tax on an inherited property?

That depends on the value of the property, the degree of kinship, and the personal exemption. For example, children pay an inheritance tax of 11 percent on amounts over 300,000 euros (after the exemption); the rates increase for higher amounts. A tax advisor can calculate the exact tax liability.

What are the tax implications if we live in the inherited property ourselves?

If an heir (spouse or child of the decedent) lives in the property themselves, an inheritance tax exemption may apply under Section 13(1)(4b) of the German Inheritance Tax Act (ErbStG)-provided that the living space does not exceed 200 m² for children and the property is used by the heir for at least 10 years. A tax advisor can determine whether and to what extent this exemption applies.

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