Have you inherited a commercial property and are worried about a high tax bill from the tax office? A standardised valuation could cost you tens of thousands of euros, as it is often 20% to 30% above the actual market value. This guide shows you how to objectively determine the value and significantly reduce your tax burden.
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The topic briefly and concisely
The valuation of commercial properties in the event of inheritance is carried out according to the income approach or the cost approach in accordance with the Valuation Act (BewG).
A private expert opinion can refute the often overestimated value set by the tax office and reduce inheritance tax by up to 30%.
Key value factors include the standard land value and the property yield rate, which are determined by local expert committees.
The valuation of a commercial property after an inheritance is a complex process with significant financial implications. The tax office uses standard procedures that often miss the true value and result in unnecessarily high inheritance tax. For heirs, it is therefore crucial to understand the legal valuation methods and act proactively. An accurate, market-based valuation not only protects against excessive claims but also ensures the value of the inherited assets for the future. We guide you through the key steps, from the legal foundations to strategic collaboration with experts.
The legal basis: The Valuation Act as a foundation
In the event of inheritance, the Valuation Act (BewG) forms the legal basis for determining the value of real estate for the assessment of inheritance tax. The aim is to ascertain the "common value" (§ 9 BewG), which corresponds to the achievable selling price on the market. For commercial properties that are over 80% used for business purposes, two methods are predominant: the income approach and the replacement cost method. The choice of method depends on whether a market-standard rent for the property can be determined. A thorough understanding of these legal aspects is the first step in reviewing the tax office's valuation. This knowledge is crucial to setting the course for the correct valuation method.
The Income Value Method: When Rental Income Determines Value
The income value method (§§ 184-188 BewG) is the standard method for rented commercial properties like office buildings or logistics halls. The value is derived from the expected future yield and consists of two components: the land value and the building income value. Since a legal amendment in 2023, the management costs are no longer applied as a flat rate but in detail, which can increase the value by up to 15%. The correct determination of the property interest rate is the greatest lever for influencing the result. A precise market value for the tax office is based on an accurate analysis of these factors. The calculation follows a clear structure:
Determination of land value (reference land value x plot area).
Calculation of the annual net income (annual gross income minus management costs).
Capitalisation of the net income taking into account the remaining useful life and the property interest rate.
Summation of land value and capitalised building income value gives the final income value.
This method requires precise knowledge of the local rental markets and management costs. Next, we will look at the alternative for properties not primarily rented out.
The asset value method: The alternative for special commercial properties
If no standard rent can be determined, the asset value method (§§ 189-191 BewG) is applied. This often pertains to self-used production facilities or specialized properties where the asset value is paramount. The total value is derived from the sum of the land value and the building asset value, which is then adjusted to the market using an asset value factor. The correct determination of standard construction costs and depreciation can influence the building asset value by over 20%. An overview of purchase and use of commercial properties helps with classification. The valuation is carried out in these steps:
Determination of the land value based on the official land reference value.
Calculation of the building asset value from the standard construction costs (attachment 24 BewG) minus depreciation.
Addition of land value and building asset value to the preliminary asset value.
Adjustment to market conditions by multiplying with the asset value factor provided by the appraisal committee.
Both methods depend on two key metrics that require closer examination.
Critical value factors: standard land value and property interest rate
The standard land value is an average locational value for land, published every two years by local expert committees. It is a crucial calculation basis in both valuation methods and can be viewed online through systems like BORIS-D. The property yield rate, also determined by the expert committee, reflects the customary market interest rate for a property and is used in the income approach. A low property yield rate of, for example, 3.5% instead of 4.5% can increase the market value by over 10%. These two factors are often the main cause of discrepancies between the tax office's valuation and the actual market value. A professional property valuation in the event of inheritance must critically examine these values. But what should you do if the official valuation is too high?
Tax Office vs. Expert: Why Your Own Report is Crucial
The tax office evaluates properties in a standardized manner without an on-site inspection, which often leads to a too high valuation. However, you have the right to prove a lower common value through a qualified expert opinion (§ 198 BewG). The costs for such an opinion, which start at around 2,800 euros, are tax-deductible as estate liabilities and often result in a tax saving that far exceeds this investment. A counter-appraisal can reduce the tax burden by an average of 15-25%. Before commissioning an expensive appraisal, a digital analysis can help. Auctoa's free ImmoGPT chat provides you with an initial, data-based assessment and reveals potential savings. This way, you can make informed decisions about the next steps and understand where challenges in the appraisal lie. In addition to the valuation, formal aspects must also be considered.
Deadlines and Allowances: Keeping an Eye on the Tax Framework
As an heir, you must report the inheritance to the responsible tax office within three months of becoming aware of it. The tax office will then ask you to submit an inheritance tax return and will set a deadline of at least one month for this. The personal tax allowances are quickly exhausted with commercial properties; for children, it is 400,000 euros, while for siblings or nephews it is only 20,000 euros. For a property value of 800,000 euros, a child would already need to tax 400,000 euros at up to 19%. An inheritance tax calculator can provide an initial indication of the expected burden. Therefore, careful planning is essential.
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The valuation of commercial property in the event of inheritance is a financial and strategic challenge. Do not rely on the general valuation of the tax office, which is often 20% too high. Hiring a qualified expert to prepare a counter-expertise is almost always a worthwhile investment. A data-driven, precise valuation is not a cost factor, but the most important tool for securing your family heritage.
Additional useful links
Wikipedia provides a comprehensive overview of inheritance tax in Germany.
The Federal Ministry of Finance offers detailed information on inheritance and gift tax.
Also from the Federal Ministry of Finance, you will find application regulations for the valuation of real estate here.
The Federal Statistical Office (Destatis) provides insights into construction and property price indices that are relevant for valuation.
A recent press release from Destatis highlights specific aspects of property valuation.
The Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR) provides a dashboard with current data on the real estate market report.
FAQ
What is the cost of an appraisal for a commercial property in the case of inheritance?
The costs for a legally admissible market value appraisal for a commercial property by a qualified expert typically start at around €2,800 and increase depending on the complexity of the object. These costs can be deducted as liabilities of the estate for tax purposes.
Do I have to accept the tax office's assessment?
No, you do not have to accept the assessment. You have the right to present your own appraisal within the appeal period to demonstrate a lower market value and thus reduce the tax burden.
What documents do I need for the assessment?
For an accurate appraisal, you will need the land registry extract, building plans (floor plans, sections), a calculation of areas, current rental agreements if leasing, and a list of operating expenses, as well as any proof of modernisations over the last 15 years.
What is the difference between income value and material value?
The income value is based on the future expected rental income and is relevant for investment properties. The intrinsic value, on the other hand, is based on the pure construction costs (substance value) and the land value, and is used for properties without a rental market, such as owner-occupied factories.
How quickly do I need to report the inheritance to the tax office?
You are legally obligated to informally notify the responsible tax office of the inheritance within three months of becoming aware of it. The request to submit the inheritance tax return will follow thereafter.
Can Auctoa help me with the assessment?
Yes, Auctoa offers a free, AI-supported initial analysis with ImmoGPT, providing you with a quick indication of the property's value and potential tax savings. This assists you in deciding whether a detailed expert report is worthwhile.
