Inheritance Manager
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Guidance for Inherited Property Communities on Real Estate
An inherited property, multiple heirs – and countless questions. This situation leads to serious conflicts in over 50% of cases. This guide provides clear decision-making support for any community of heirs regarding real estate, to settle the estate fairly, quickly, and without costly disputes.
With access to Google, BORIS, and Deep Research.
An impartial property valuation is the most important basis for avoiding conflicts in an inheritance community and making fair decisions.
The joint sale of the property is usually the fairest and simplest solution to divide the estate cleanly and end disputes.
The divisional auction should absolutely be avoided, as it often leads to financial losses of 20-30% of the market value.
Are you facing the challenge of having to make decisions about a property with co-heirs? You are not alone. A community of heirs is legally a compulsory partnership, where all parties must act jointly, which often leads to impasses. Without a structured approach, there is a risk of financial losses of up to 30% of the property's value and the destruction of family harmony. This article provides you with a practical decision-making guide, enabling your community of heirs to evaluate the three core options regarding property – selling, taking over, renting – based on facts and find the most financially sound solution for all parties involved.
An "Erbengemeinschaft" automatically arises when a decedent leaves behind multiple heirs and no will dictates otherwise. Legally, you are part of a "joint heirship" according to § 2032 BGB. This means the property belongs to everyone collectively and to no single person individually, requiring 100% agreement for decisions. Even routine administrative tasks may require unanimous consent, often leading to a deadlock if even one heir obstructs. This legal hurdle is the main reason why a clear decision guide for an Erbengemeinschaft in property matters is essential. Without it, disagreements quickly escalate. The next logical step, therefore, is to establish a shared, indisputable factual basis.
Before discussing sale or acquisition, the exact market value of the property must be determined. Emotional valuations account for over 70% of disputes. A professional, data-backed property valuation following an inheritance is therefore not a cost factor, but an investment in peace. It serves as a neutral basis for all further steps. A legally compliant appraisal costs from approximately €2,800, but these costs can be deducted as estate liabilities. With an objective figure on the table, payout amounts can be calculated fairly and sales offers realistically assessed. Tools like the Auctoa inheritance manager provide you with such a data-based foundation in just a few steps. With this knowledge, the three main options can be evaluated objectively.
With a clear market value, you can explore the three core scenarios. Each option carries specific financial and personal consequences that every member of the community of heirs needs to be aware of. The decision depends on the goals of all coheirs: Is it about quick liquidity, preserving the family estate, or long-term income? A careful analysis prevents one party from being disadvantaged. Here is an overview of the most common paths:
Sale to third parties: This is the most common solution as it ensures a clean and final financial separation. The proceeds are distributed according to the inheritance quotas.
Paying off a coheir: One heir wishes to keep the property and buys out the others. This requires significant financial capacity from the heir taking over.
Joint rental: The property becomes an income-generating asset. This creates ongoing income but also requires joint management with at least 10-15% of the annual earnings set aside as reserves.
Sale of one's own inheritance share: Every coheir can sell their share, but the other heirs have a legal pre-emption right of two months.
Choosing the right option is the central decision-making aid for a community of heirs in real estate and should be made based on the financial objectives of all involved.
The sale of the property on the open market is the fairest and simplest solution for most communities of heirs. The purchase price achieved is an objective measure, ending disputes over the true value. The proceeds are distributed according to the inheritance shares after deducting all costs, such as for property valuation or minor repairs. The speculation period is important: If less than ten years have passed between the original purchase by the deceased and the sale, the profit must be taxed. An exception applies if the deceased lived in the property during the year of sale and the two preceding years. A sale also frees all heirs from ongoing costs such as property tax and maintenance, which can quickly add up to several thousand euros per year. This approach offers a clear resolution, but what happens if an heir wants to keep the family home at all costs?
If an heir wants to take over the property alone, they must pay out the other co-heirs. The basis for the amount of the payout is the previously determined market value. For example, if the value of the house is 400,000 euros and there are four heirs in equal parts, the heir taking over must pay 300,000 euros to their three co-heirs. This process, known as partitioning, must be notarised. The advantage is that the property remains within the family. The challenge is the financing of the payout, which often requires taking out a loan. In addition, when a co-heir takes over, there is usually no land transfer tax, which can mean a cost advantage of up to 6.5% compared to an external buyer. If neither a sale nor a takeover is an option, joint management comes into focus.
Keeping and renting out the property can be an attractive source of passive income. However, this turns the community of heirs into a landlord company, which brings new obligations. All decisions, from selecting tenants to repairs, must still be made jointly. This poses significant potential for conflict in the future. In addition, all co-heirs must report the rental income as earnings for tax purposes. Another drawback: A rented property often achieves a 15-25% lower sale price later compared to a vacant one. Before deciding on this course, you should clearly define the management tasks. These include:
Creation of a legally compliant rental contract.
Execution of the service charge statement (annually).
Establishment of a maintenance reserve (at least 1 Euro per sqm per month).
Regular examination of rent increase opportunities.
Organization and payment of repairs and maintenance.
If no agreement can be reached on any of these three options, the last and worst solution threatens.
If the heirs cannot agree, any co-heir can apply for a partition auction at the local district court at any time. This is a form of forced auction intended to convert the indivisible asset of property into divisible cash. However, in such an auction, often only 70-80% of the actual market value is achieved. Furthermore, substantial court and expert fees are incurred, further reducing the proceeds. The process can drag on for over a year and often permanently destroys family relationships. Therefore, the partition auction should only be seen as leverage for finding a solution, not as a genuine strategy. Professional mediation for heir communities can help avoid this disastrous step. A structured approach is always the better way.
Managing an inherited property in a community of heirs is a complex task that can quickly lead to conflicts without a clear strategy. An objective property valuation is the first and most important step to create a common basis for all further decisions. Whether selling, buying out, or renting – each option has advantages and disadvantages that must be carefully weighed. An open sale often represents the fairest solution, while a forced auction is almost always associated with significant financial losses. A proactive, fact-based approach protects not only assets but also family harmony. A good decision-making aid for a community of heirs in property matters replaces instinct with data and emotions with facts.
Wikipedia provides a comprehensive overview of the legal situation of an inheritance community, where multiple heirs jointly manage an estate.
The Federal Statistical Office of Germany (Destatis) offers a press release with data and statistics on the topic of heirs and inheritance.
The Deutsche Bank published a study from 2024 on the subject of heirs and inheritance in Germany.
Statista provides a forecast on the number of inherited properties in Germany.
The Federal Chamber of Notaries (BNotK) offers a glossary of the wills register with explanations of relevant terms related to wills and inheritance.
The Chambers of Notaries offer a guide on the subject of inheritance community, providing assistance and information for members of an inheritance community.
Wikipedia explains the basics of inheritance tax in Germany.
The Empirica Institute offers a study or publication on the topic of heirs.
Wikipedia provides general information on the subject of inheritance.
Wikipedia describes the transfer of an inheritance share.
What happens if an heir lives in the inherited house and refuses to move out?
If an heir is living in the house, the consent of the other co-heirs is required. If they refuse to pay compensation for use (similar to rent) or to pay off the others, the co-heirs can initiate legal action for a settlement or, as a last resort, apply for a forced partition sale to dissolve the co-heir community.
What taxes apply to a community of heirs for a property?
There are two main taxes that may apply: 1. Inheritance tax, which each heir must pay on their share if it exceeds their personal exemption. 2. Capital gains tax (income tax), if the property is sold at a profit within ten years of its purchase by the deceased and was not used personally.
Is a property valuation report mandatory?
An official valuation report is not legally required but is highly recommended. It is the only way to determine an objective value that serves as a basis for paying off co-heirs, dividing the sale proceeds, and presenting to the tax office to avoid excessive inheritance tax.
How long does it take to dissolve a community of heirs?
The duration depends on the unity of the heirs. A quick, amicable sale can result in dissolution being completed in 3-6 months. In case of disputes, especially if a forced partition sale becomes necessary, the process may extend over several years.
What is the difference between selling an inheritance share and selling the property?
When selling the property, the community of heirs sells the house to a third party. When selling an inheritance share, an individual co-heir sells only their share of the entire estate (including the property) to another co-heir or an external investor. The community of heirs initially remains intact.
Can a forced partition sale be prevented?
A requested forced partition sale cannot be completely prevented, but it can be delayed. Co-heirs can apply for a six-month suspension to allow time for an amicable settlement. The best way to prevent it is through a proactive agreement on sale or takeover.
