Inheriting the family home is more than just a financial transaction - it's an emotional dilemma. Are you facing the decision to sell or move in yourself? This article provides a data-driven analysis to help you make the best choice financially and personally.
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The topic briefly and concisely
Check the inheritance tax: Children have a tax-free allowance of €400,000 per parent; a professional evaluation provides clarity here.
Pay attention to the speculation period: A sale is often tax-free if the deceased lived in the property themselves beforehand or if it was in their possession for over 10 years.
Calculate renovation costs realistically: Meeting GEG requirements and the need for modernization can quickly require investments exceeding €50,000.
Holding the keys to your parents' house in your hands signifies responsibility. Suddenly, you're faced with one of the most consequential decisions of your life: should you sell the inherited house or move in yourself? This choice is rarely simple and is accompanied by financial realities, tax pitfalls, and deep emotions. A wrong decision can cost you tens of thousands of euros or lead to years of regret. This guide offers you a structured, fact-based analysis. We explore the three core scenarios – selling, personal use, and renting – and provide you with the tools to make a secure and informed decision.
The Financial Triage: Initial Analysis of the Core Facts
Before emotions take over, a sober assessment is essential. The first step is clarifying inheritance tax. For children, a personal allowance of €400,000 per parent applies. If the inherited property's value is below this, no inheritance tax is due. Everything exceeding this allowance is taxed at a rate of 7% to 30%. Therefore, a professional and swift property valuation is not a luxury but a necessity to achieve financial clarity. Only with a realistic market value can you accurately calculate the tax burden and set the course for the next steps correctly. With a well-founded valuation of your inherited house, you lay the foundation for all further considerations.
This initial analysis protects you from unpleasant surprises and forms the basis for weighing up different scenarios.
Scenario 1: The Sale – A Cost-Benefit Analysis
The sale of the family home promises quick liquidity but is associated with costs. Expect notary fees of around 1.5% of the purchase price and estate agent commissions, which vary depending on the federal state. A decisive factor is the speculation tax. This applies if less than ten years have passed between the purchase by the deceased and the sale by you. However, the tax can be avoided: If the deceased occupied the property during the year of sale and the two preceding years, the sale is tax-free for you. This regulation is a significant advantage for many heirs. Therefore, a thorough examination of the period of ownership and use is essential. A detailed checklist for property sales helps you keep track of all items.
The following cost items should be considered in your calculation:
Notary fees: approx. 1.5% of the notarised purchase price.
Land registry costs: approx. 0.5% of the purchase price, often included in the notary fees.
Estate agent commission: Usually between 3.57% and 7.14% of the sale price, depending on the region.
Cost for the energy performance certificate: Between 100 and 500 Euros depending on the type.
Potential speculation tax: Dependent on your personal income tax rate.
Once the financial aspects of the sale are clear, the alternative comes into focus: moving in yourself.
Scenario 2: The Move-In – Investment Needs and Emotional Return
Moving into one's childhood home is often the most emotionally appealing option. However, this path requires a realistic assessment of the property’s condition. Particularly with older homes, renovation costs can quickly accumulate. An energy-efficient renovation according to the Building Energy Act (GEG) may be mandatory if you move in as the new owner. The costs for a complete renovation can range from 1,200 to 2,500 euros per square metre. Even the renewal of windows and the heating system can easily exceed 50,000 euros. These investments need to be financed and should be weighed against the benefits. A thorough analysis of whether a renovation-required house is a burden or opportunity is crucial.
Typical renovation measures often include:
Insulation of the roof or top floor ceiling (Costs: 30-100 €/sqm).
Renewal of the heating system (mandatory after 30 years for constant temperature boilers).
Modernisation of the electrics (approx. 100-150 €/sqm).
Replacement of old windows (from 500 € per window).
Bathroom renovation (starting from 10,000 euros upwards).
But what if neither selling nor self-use is the right solution? Then renting could represent a third option.
Scenario 3: Rental as a strategic compromise?
Renting out the family home seems like an attractive way to generate regular income and keep the property within the family. A solid net rental yield in Germany should be at least 3.5% to 4% to be considered profitable. So, for a property worth 400,000 euros, you would need to achieve an annual cold rent of at least 14,000 euros. However, the responsibilities of a landlord are often underestimated. Non-apportionable costs for maintenance and management can quickly reduce the return by 15-25%. Additionally, you bear the full risk of rental defaults. The decision on whether the pros and cons of a sale might eventually outweigh renting should be undertaken carefully. For many heirs, the administrative burden is a reason to opt for selling.
Renting becomes especially complex when multiple people inherit and form a community of heirs.
Special Case of a Community of Heirs: How to Avoid Conflicts
When multiple people inherit together, a community of heirs is formed. Here, all major decisions, such as selling or renting, must be made unanimously. This poses significant potential for conflict, as the financial situations and emotional ties of the co-heirs often differ greatly. If just one heir blocks, the community becomes incapable of acting. Statistically, over 50% of all inheritance disputes arise in connection with real estate. Clear communication and neutral moderation are crucial here. One option is for one heir to buy out the others and become the sole owner. However, this requires an agreement on the value and financial capability of the acquiring party. An external, data-driven decision-making aid for communities of heirs can help to avoid disputes and find a fair solution for all.
The biggest challenge is often not the financial, but the emotional dimension of the decision.
Conclusion: Make a data-driven decision for your future
The question of whether to sell your inherited parental home or move in yourself cannot be answered in general terms. Selling provides financial freedom and a clear conclusion, while moving in involves an emotional investment with potentially high renovation costs. Renting out is a compromise that comes with significant administrative effort. Your final decision should rest on a solid foundation of three pillars: an objective property valuation, a clear analysis of the tax consequences, and an honest reflection of your personal life planning. Use tools like Auctoa ImmoGPT to quickly clarify initial questions, or obtain a non-binding evaluation to replace speculation with facts. A well-informed decision is always the best decision.
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Additional useful links
Statistisches Bundesamt (Destatis) provides information on construction prices and the real estate price index in Germany.
Bundesministerium der Finanzen provides information on inheritance and gift tax in Germany.
Statistisches Bundesamt (Destatis) provides a table on homeownership rates in Germany.
ZIA (Zentraler Immobilien Ausschuss) publishes the spring report of the real estate industry in Germany.
Deutsche Bundesbank offers statistics on real estate and construction service prices in Germany.
DIW (Deutsches Institut für Wirtschaftsforschung) analyses the development of purchase prices in the housing market in 2024.
FAQ
Sell or Move In: Which is Financially Smarter?
This depends on three factors: 1. The need for renovation – high costs can make moving in unprofitable. 2. Your tax burden – check inheritance and capital gains tax. 3. The market value – a high selling price might be financially more attractive than the emotional return of moving in. A data-based assessment is the first step towards the answer.
What happens if the community of heirs cannot reach an agreement?
If a unanimous decision cannot be reached, a deadlock threatens. Solutions include mediation, buying out a co-heir by the others, or, as a last resort, a partition auction. The latter often leads to financial losses and should be avoided.
How quickly do I need to decide after the inheritance?
You have six weeks to renounce the inheritance. There's no fixed deadline for deciding between selling or personal use. However, it is advisable to act promptly to minimise ongoing costs (property tax, insurance) and meet refurbishment obligations (a 2-year deadline if ownership changes).
Can I rent out my inherited house instead of selling it?
Yes, renting is an option. You should aim for a net rental yield of at least 3.5%. However, consider the administrative effort, maintenance costs, and the risk of rental defaults. Often, selling is the simpler and financially clearer solution.
What role does the energy certificate play in the sale?
The energy certificate is legally required when selling a property and must be presented to potential buyers at the latest during the viewing. The costs range from 100 to 500 euros, depending on the type of certificate. If it is missing, fines may be imposed.
How can Auctoa help me make a decision?
Auctoa offers a fast, AI-driven, and neutral property valuation. This provides you with a solid, data-based foundation to objectively assess the financial implications of your decision—whether selling, moving in, or renting—and to find the best path for your situation.
