Is an inheritance of real estate awaiting you, and are you fearing a high tax burden? Many heirs pay more than necessary because they do not know the true value of their property. This article shows you how to calculate inheritance tax for your property online in advance and how an accurate valuation can save up to 30% of the tax office's demands.
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The topic briefly and concisely
The market value of the property is the biggest lever to reduce inheritance tax; you should always critically assess a general valuation by the tax office.
Depending on the degree of kinship, you are entitled to tax exemptions ranging from €20,000 to €500,000, which directly reduce your tax burden.
A qualified counter-appraisal is recognised by the tax office and can reduce the property value and thus the tax liability by up to 30%.
The inheritance of a property is often associated with emotional and financial uncertainties. One of the biggest worries is the demand from the tax office, as inheritance tax can quickly amount to five or six-digit figures. The good news: the initial calculation by the tax office is not set in stone. The key lever to reduce your tax burden is the accurately determined market value of the property. A data-based analysis can reveal deviations of 20% or more compared to the authorities' general estimates. In this article, you will learn how to calculate your prospective tax burden yourself and what strategic steps you can take to secure your inheritance as best as possible.
Understanding the three pillars of inheritance tax
The calculation of inheritance tax for a property is based on three key factors anchored in the Inheritance Tax and Gift Tax Act (ErbStG). First, the market value of the property is used as the basis. Second, your degree of kinship to the deceased determines your tax class, which ranges from I (close relatives) to III (non-relatives). Third, your personal allowance is deducted from the market value; this varies significantly depending on the tax class. The tax rates applied to the remaining amount range from 7% in tax class I to 50% in tax class III. A precise understanding of these three pillars is the first step towards calculating the inheritance tax and avoiding unnecessary payments. These elements significantly determine the extent of the financial burden.
Utilise the market value as a crucial lever
The tax office often determines the value of your inherited property through standardized mass procedures such as the comparative value or replacement value method. These blanket assessments can exceed the actual market value by 15% to 20%, leading directly to a higher tax demand. However, the value set by the tax office is not a final judgment. You have the right to demonstrate a lower, more realistic value through an independent market value appraisal. A depreciation of just €50,000 can reduce your tax burden by over €5,000, depending on the tax rate. Find out what your inherited house is worth to establish a solid negotiating position. Therefore, knowing the exact property value is your most important tool for managing your tax liability.
Strategically apply tax classes and allowances
Your relationship to the deceased places you in one of three tax classes, determining your tax-free allowance and applicable tax rate. Accurate classification is essential for the calculation. Here are the main allowances according to § 16 ErbStG:
€500,000 for spouses and registered civil partners (Tax Class I)
€400,000 for children and stepchildren (Tax Class I)
€200,000 for grandchildren (Tax Class I)
€100,000 for parents and grandparents on inheritance (Tax Class I)
€20,000 for all other heirs, including siblings, nieces, nephews, and non-related parties (Tax Classes II and III)
These allowances can be reused for gifts every 10 years, allowing for long-term estate planning. Find out ways to legally avoid inheritance tax to protect your assets. The correct application of these allowances is a crucial step in the calculation.
Calculate the tax burden in 4 steps
With the right values, you can estimate your expected inheritance tax yourself. Such a preliminary calculation protects you from surprises and provides planning security. Proceed as follows:
Determine the market value: Establish the realistic market value of the property. A professional online valuation by Auctoa offers a quick and data-driven basis for this.
Subtract personal allowance: Deduct your personal allowance (e.g. €400,000 for a child) from the market value.
Calculate taxable amount: The result is the taxable acquisition.
Apply tax rate: Multiply the taxable amount by the tax rate applicable to your tax class (e.g. 11% for a child for an amount up to €600,000).
An example: A son inherits a house worth €650,000. After deducting the allowance of €400,000, €250,000 remains. With a tax rate of 15%, the tax amounts to €37,500. An accurate valuation that reduces the value to €600,000 would already reduce the tax by €7,500. Use our inheritance tax calculator for an initial assessment. This calculation shows how important accurate values are.
The Limits of Online Calculators and the Strength of an Expert Report
Online calculators are useful tools for a first orientation, but they cannot replace a professional appraisal. Often, they do not take into account individual factors such as a backlog of renovations, construction defects, or third-party rights (e.g., a right of residence) that can significantly reduce the value. The tax office only accepts proof of a lower market value if it is evidenced by a qualified appraisal according to § 198 BewG. Such a counter-appraisal can reduce the tax valuation by 20-30%. Therefore, the investment of around 0.5% of the property's value in an appraisal quickly pays off. Understand the role of an appraisal in inheritance to strengthen your position with the tax office. A detailed appraisal is the basis for further strategic planning.
Further strategies for legally reducing the tax burden
In addition to challenging the market value, there are other recognized methods to reduce inheritance tax. One of the most effective is using the tax exemption for what's known as the family home. If the spouse or a child inherits the property used by the deceased and resides in it for at least 10 more years, the inheritance tax is completely waived. For children, there is a restriction on living area to 200 square meters. Another option is gifting during one's lifetime, as the allowances can be fully utilized again every 10 years. For rented properties, the legislator also grants a flat-rate valuation discount of 10%, so only 90% of the value is tax-relevant. Are you unsure which strategy suits you? The Auctoa ImmoGPT chat offers you a free and non-binding initial analysis of your situation. The right strategy can reduce your tax burden to zero.
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Calculating the inheritance tax for a property online in advance is the first step towards significant cost savings. The key is to proactively review and adjust the market value, often set too high by the tax office, using a data-driven appraisal. A reduction of just 10% in the property's value can already mean a tax saving of several thousand euros. Make use of your legal options, from allowances to special regulations like the family home exemption. Act based on data, not just the first notice from the tax office – your wealth will thank you.
Additional useful links
Bundesfinanzministerium offers comprehensive information on inheritance and gift tax.
Haufe examines planned tax changes for 2025, including adjustments to property transfer and inheritance tax.
Bundesfinanzministerium explains the application of valuation rules for real estate within the framework of inheritance and gift tax.
Statistisches Bundesamt (Destatis) releases a press statement with current data.
Statistisches Bundesamt (Destatis) provides an overview of publications on the topic of inheritance tax.
Wikipedia offers a comprehensive article on inheritance tax in Germany.
Deutsche Bundesbank provides statistics on real estate and construction prices.
Deutsche Bundesbank analyses the decline in residential property prices in 2023 and the pressure on rents.
Gesetze im Internet offers the full text of the Inheritance Tax and Gift Tax Act (ErbStG).
FAQ
What can I do if I can't pay the inheritance tax immediately?
Under certain conditions, you can apply for a tax deferral at the tax office. This is particularly possible if immediate payment would require the sale of the inherited property. A deferral can be granted for up to ten years.
Does the tax allowance in an inheritance community apply individually to each person?
Yes. In an inheritance community, the value of the property is distributed among the heirs proportionally. Each heir can then apply their individual exemption to their share. This can significantly reduce the overall tax burden for the community.
What reference date does the tax office use for the valuation of the property?
For the valuation of the property and the calculation of inheritance tax, the date of death of the deceased is always the decisive reference date. Increases or losses in value after this date are irrelevant for tax calculation.
Does a registered right of residence in the land register reduce inheritance tax?
Yes, a lifelong right of residence or usufruct reduces the market value of the property, as it restricts its use and exploitation. The value of this burden is capitalized and subtracted from the market value, which leads to a lower inheritance tax.
Is the same tax applied to a gift as to an inheritance?
Yes, the tax rates and allowances for gifts are fundamentally identical to those for inheritances, as outlined in the Inheritance and Gift Tax Act (ErbStG). The major advantage of a gift is that the allowances can be used anew every 10 years.
What is the difference between market value and standard value?
The market value (or 'common value') is the current market value of the property and the basis for inheritance tax. The standard value is an outdated, purely tax-related figure that is only used for property tax and is significantly lower than the market value.
