Inheriting a house presents you with a complex choice: sell, rent, or move in yourself? This decision carries financial and emotional implications. We offer you clear guidance for deciding on your inherited house in Germany.
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The topic briefly and concisely
Observe legal deadlines: You have only 6 weeks to accept the inheritance and 3 months to report it to the tax office.
An impartial property valuation is the basis for all decisions and can significantly reduce your inheritance tax burden.
Calculate all costs: In addition to inheritance tax, there may be costs for a legally required renovation (GEG) and the sale.
The news of inheriting a property is often associated with grief and raises urgent questions. Suddenly, you are the owner and need to make one of the most important financial decisions of your life. This guide serves as a reliable decision-making aid for your inherited house in Germany. We systematically guide you through the initial obligations, the three main options, and the associated costs. This way, you can turn uncertainty into a clear, data-driven action plan and secure the value of your inheritance for the future.
The First 100 Days: These Deadlines and Obligations You Must Know
Following an inheritance event, a race against time begins, as the law sets clear deadlines. You have only six weeks to decide whether to accept or reject the inheritance. This decision is binding and should only be made after reviewing any potential debts. Regardless, you are required to inform the relevant tax office of the inheritance within three months. A significant cost trap can be avoided: Apply for the correction of the land register within two years of the event, and the usual fees will be waived.
Your immediate duties as an heir involve several steps. A careful review of documents is the first step towards ensuring security.
Review the inheritance: Review all documents and the land register to get an overview of possible encumbrances such as mortgages.
Accept/reject the inheritance: Make your decision within the 6-week period. Rejection must be declared either through a notary or at the probate court.
Inform the tax office: Report the inheritance informally within three months to avoid penalty interest.
Apply for a certificate of inheritance: You will need this document as official proof of your status as an heir for banks and authorities.
Have the land register corrected: Submit the application to the land registry office to be registered as the new owner and benefit from the 2-year fee exemption.
These administrative tasks form the foundation for the next crucial step: determining the property's value.
The foundation of every strategy: Determining the real estate value
Every decision regarding the future of your inherited property hinges on its current market value. The tax office determines its own value for the purpose of inheritance tax, which is often based on general data and does not take the property's individual condition into account. This official value can be up to 30% higher than the actual market value. Therefore, an independent market value appraisal is indispensable. It not only serves as proof of a lower value to the tax authorities, potentially reducing your tax burden, but it also forms the basis for a realistic sale price or the fair distribution among co-heirs. A data-driven valuation from Auctoa provides you with this objective foundation quickly and reliably. This way, you know exactly what your inherited house is worth. With this knowledge, you can objectively weigh the pros and cons of selling.
Option 1: Selling – Achieve financial clarity in under 6 months
Selling is often the quickest and simplest solution, especially for communities of heirs. It provides immediate liquidity and equitably distributes the value among all parties, thus preventing conflicts. However, taxes may incur in this process. The so-called speculation tax is due if less than ten years have passed between the original purchase by the decedent and your sale. The amount depends on your personal income tax rate. Additionally, there are sales costs such as agent fees, which often range between 3% and 7% of the sale price, and notary fees of around 1.5%. A detailed checklist for the sale helps keep track of all items. Selling is ideal if you need capital or wish to avoid the administrative burden of a property. But what if you see the property as a long-term investment?
Option 2: Rent Out – Monthly Income as a Long-Term Investment Strategy
Renting out a property guarantees you regular income and allows you to benefit from future increases in value. For rented properties, the tax office only considers 90% of the market value for inheritance tax, which reduces your tax burden from the outset. However, as a landlord, you are also responsible for maintenance and must set aside reserves of at least €10 per square metre per year. Additionally, you must tax the rental income at your personal rate.
The role of a landlord comes with several obligations.
Tenancy Agreement: Legally secure contracts protect you from future disputes.
Maintenance: You are responsible for repairs and the upkeep of the building's technical systems.
Service Charge Statement: Once a year, you must prepare an accurate statement for your tenants.
Finding Tenants: When there is a change, you must find reliable and financially sound new tenants.
A sales or rental calculator can illustrate the financial attractiveness of this option. The alternative is moving in, which primarily offers emotional benefits.
Option 3: Moving in – Emotional Attachment and the Pitfalls of Renovation Duty
Moving into the family home is an emotional decision that can also have tax advantages. Spouses and children can inherit a family home of up to 200 square metres completely tax-free if they live in it themselves for at least ten years. However, beware of hidden costs: the Buildings Energy Act (GEG) imposes a renovation obligation for older properties when ownership changes. As an heir, you have two years to, for example, insulate the roof or replace a heating system over 30 years old. These measures can quickly incur costs of over 50,000 euros and must be factored into your calculations. A guide for houses in need of renovation is an important read here. These costs are particularly relevant when several heirs are involved.
Special case of co-heir community: How to successfully navigate potential conflicts
If the community of heirs consists of multiple people, all essential decisions must be made unanimously. This carries significant potential for conflict, as each co-heir has different goals and financial capabilities. If no agreement can be reached on sale, leasing, or use, a partition auction is the last resort—a process that often results in a sale price up to 30% below market value. Clear communication and neutral moderation are crucial. Seek support early, for example, through the Auctoa Inheritance Manager, to find a fair solution for everyone. An objective valuation of the property is the first step to establishing a factual basis for discussion and avoiding escalation. A clear decision-making guide for heir communities can structure the process. This transforms a complex starting point into a shared success story.
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Deciding what to do with an inherited house is one of the most significant financial turning points in life. A hasty decision driven by emotions can cost you thousands of euros. Success lies in having a structured approach: clarify the facts, determine the real value, and analyse all options with a clear head. Use professional decision support for your inherited house in Germany to accurately assess risks such as renovation obligations or taxes. For an initial data-based evaluation, you can use our ImmoGPT chat at any time. With the right strategy, an inheritance becomes not a stumbling block, but a valuable cornerstone for your financial future.
Additional useful links
The Bundesfinanzministerium explains inheritance and gift tax in Germany.
Wikipedia provides a comprehensive overview of inheritance law in Germany.
FAQ
What immediate costs will I incur when inheriting a property?
Immediately after the inheritance occurs, you should expect costs for the certificate of inheritance (depending on the value of the estate), possibly notary fees and charges for land registry correction (the latter are waived if applied for within two years). Ongoing expenses such as property tax, insurance, and operating costs also transfer to you immediately.
Selling, Renting, or Moving In – What Is the Best Option?
The best option depends on your personal life situation, financial goals, and the condition of the property. Selling provides quick liquidity. Renting creates long-term income but requires management effort. Moving in is emotionally satisfying but may entail high renovation costs. A data-driven analysis is crucial.
How is the value of an inherited house determined for tax purposes?
The tax office uses standardised methods (such as the comparative method), which often result in a high valuation. You have the right to demonstrate a lower, more realistic market value by obtaining a qualified market value appraisal from an expert, thereby reducing your tax burden.
What is the renovation obligation under the GEG for heirs?
The Building Energy Act (GEG) requires new owners of existing properties to carry out energy renovations. This typically includes replacing boilers that are more than 30 years old and insulating the top floor ceiling or the roof. You have two years to implement these measures.
What can I do if the inherited house is in debt?
If the debts (e.g., mortgages) exceed the value of the property, you can renounce the inheritance within six weeks of becoming aware of it. This way, you are not liable for the deceased's obligations. Therefore, a prior examination of the land registry entries is essential.
Do I need an energy performance certificate to sell an inherited house?
Yes, at the latest during the viewing of the property by prospective buyers, you must be able to present a valid energy certificate. The issuance costs between 100 and 500 euros, depending on the type of certificate.
