Inherited a PropertyOptions, Taxes and the Path to a Sale

The three options after an inheritance

1. Move in yourself

If you use the inherited property yourself, you can avoid inheritance tax (Erbschaftsteuer) under certain conditions: if it was the deceased's family home, the heir moves in without delay and lives there for at least ten years, the property remains tax-free – for spouses regardless of value and size. For children, the exemption applies to up to 200 m² of living space; the rest is taxed proportionately. If the heir moves out within the ten years without a compelling reason, the exemption lapses retroactively.

2. Let

Letting generates ongoing income and builds wealth over the long term. However, the condition of the property and its lettability on the local market must be assessed realistically. → Letting a residential property

3. Sell

Selling frees up capital and ends your responsibility for the property. Particularly in a community of heirs, selling is often the most pragmatic solution. → Selling a residential property

Inheritance tax on property

Inheritance tax depends on the degree of kinship and the value of the property. In Bavaria, the nationwide allowances apply:

The tax value of the property is determined by the tax office on the basis of the Valuation Act (Bewertungsgesetz) and may differ from the market value. Where there are larger differences, a market value appraisal (Verkehrswertgutachten) can reduce the tax burden. Details from the Bayerisches Landesamt für Steuern (Bavarian State Tax Office).

Community of heirs: when several heirs have to decide

A community of heirs (Erbengemeinschaft) arises automatically when several people inherit. All heirs have joint power of disposal – no heir can dispose of the property alone.

Typical challenges:
Differing ideas (one wants to keep it, another to sell). Emotional attachment to the parental home. Unclear ideas about value. Lack of communication.

Possible solutions:
One heir takes over the property and pays out the others. The property is sold jointly and the proceeds are divided. In rare cases: a partition auction (Teilungsversteigerung), which should be avoided – it usually achieves well below market value.

In this situation, a neutral estate agent can act as a mediator between the heirs and provide a market-based valuation that all sides can understand.

Correcting the land register

After a death, the land register (Grundbuch) must be corrected. For this you need a certificate of inheritance (Erbschein) or a notarised will with the record of its opening (Eröffnungsprotokoll). Correcting the land register is free of charge within two years of the death.

Speculation tax on inherited property

When calculating the ten-year period (§ 23 EStG), the date on which the deceased acquired the property counts, not the date of the inheritance. If the deceased bought the property more than ten years ago, the profit on sale is tax-free. → Speculation tax on property

The first steps after a death

The first weeks in particular are emotionally draining. It is important to protect the house from damage – a burst pipe in an empty house in winter can quickly cause costs running into five figures.

Worked example: inheritance tax for children and nieces

A widow leaves a detached house in Lichtenfels (tax value €320,000) and savings of €80,000.

The example shows: for children, no inheritance tax is usually due on typical property values in Oberfranken. For distant relatives and unmarried partners, on the other hand, it can become expensive – early estate planning pays off here, for example through a gift during one's lifetime. → Gifting a property

Deferral: If inheritance tax has to be paid on a residential property and this is only possible by selling it, the tax office can, on application, defer the tax for up to ten years if the heir lives in the property or lets it (§ 28 ErbStG).

One heir takes over the house: worked example

Three siblings inherit their parents' house in Kulmbach, market value €270,000, no debts. The sister would like to take over the house.

The sister needs financing or equity of around €180,000 for this. Whether all the siblings consider the value fair depends on a transparent valuation – ideally from a neutral party. → Free valuation

The vacant inherited house: obligations and risks

Until a decision is made, an inherited house often stands empty for months. During this time:

1. Insurance: The buildings insurer must be informed of the vacancy. With longer vacancies, special obligations often apply, such as regular checks.
2. Frost protection: Do not switch off the heating, or drain the pipes.
3. Public safety (Verkehrssicherung): Clear and grit the pavements, secure loose roof tiles – the heirs are liable.
4. Running costs: Property tax, insurance, electricity and heating are borne jointly by the heirs.
5. Clearance: Clearing a household costs €2,000 to €8,000 depending on the scope. Personal keepsakes should be divided calmly beforehand.

Selling from an estate: the process

1. Obtain a certificate of inheritance or a notarised will with the record of its opening.
2. All heirs agree on the sale, the minimum price and a contact person – a written power of attorney for one heir makes the process easier.
3. Valuation and pricing strategy.
4. Clear the house, carry out small repairs, gather the documents. → Checklist for sellers
5. Marketing, discreetly without a public advert if desired.
6. Notary appointment: all heirs sign, in person or with a power of attorney.
7. Distribution of the proceeds according to the inheritance shares.

The general selling process is described in Selling property: the process in 10 steps.

Letting instead of selling: when it pays off

Some heirs do not want to sell their parents' house, but do not want to move in either. Letting can be worthwhile if:

• the house is in a sought-after location and can be let without major renovation,
• the heirs agree on management, costs and income,
• none of the heirs needs their share in the short term,
• someone is on site or a property manager is appointed.

Letting by a community of heirs works well if one heir takes over the management and the others give them a power of attorney. Income and expenses are distributed and taxed according to the inheritance shares. Letting often requires investment first – for example the retrofitting obligations under the Buildings Energy Act (GEG) or a new heating system. More under Finding tenants.

Letting go of the parental home emotionally

An inherited house is rarely just a property. For many heirs, the sale is a farewell. What helps:

1. Take your time: If nothing is pressing, decisions do not have to be made in the first few weeks. The house should, however, be secured and insured.
2. Preserve memories: Sort photos, personal items and documents calmly before a household clearance begins.
3. Decide together: Address differing expectations among siblings openly.
4. Neutral support: An outside valuation takes the tension out of the price question.

We have supported many communities of heirs and know that sensitivity is just as important here as market knowledge.

Inherited property with heirs living abroad

If individual heirs live abroad, some special rules apply: powers of attorney for notary appointments usually have to be notarially certified and, where necessary, provided with an apostille; certificates of inheritance from abroad are not always recognised; and tax questions affect several countries. Allow additional time for this. More under International buyers.

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Phone: 0151 58363197 | Free valuation for inherited property