Have you jointly inherited a property and one of the co-heirs wants to take it over? This step involves financial and legal hurdles that can quickly lead to costly conflicts without a clear plan. We will show you how to structure the sales process in five steps to secure a fair outcome for all parties involved.
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The topic briefly and concisely
An impartial market value appraisal is the essential basis for avoiding price disputes and determining a fair payout amount.
The sale to a co-heir must be legally secured through a notarial settlement agreement; the costs for this amount to approximately 1.5-2.0% of the property's value.
In the transfer within the community of heirs, there is no real estate transfer tax, and the speculation tax can be avoided under certain conditions.
Selling an inherited property to a co-heir is one of the most common yet complex tasks for an inheritance community. While the desire to keep the property within the family is understandable, execution often fails due to differing price expectations and unclear legal conditions. Disagreements can quickly lead to blockades, potentially resulting in a devaluation via a forced sale by auction. This guide provides you with a clear, data-driven strategy to make the sales process transparent and efficient. This ensures that the property's value is objectively determined and that the sale is carried out legally compliant and tax-optimized for all parties involved.
Laying the Foundations: The Community of Heirs and Its Rules
When multiple people inherit, they automatically form a community of heirs under § 2038 BGB. This body jointly manages the estate, and all important decisions, such as the sale of a property, require 100% unanimity. Just one dissenting vote can block the entire process. Statistics show that over 60% of all inheritance disputes involve real estate, highlighting the need for a clear strategy. Before a sale to a co-heir is even conceivable, all heirs must be registered as new owners in the land register, which is possible free of charge within two years after the inheritance. Early agreement on the procedure is therefore not just advice but an economic necessity. The right decision-making aid for communities of heirs is always based on a solid data foundation. This first step ensures that everyone acts on the same information basis before addressing the central question of value.
Step 1: Determine the objective market value as a neutral basis for negotiation
The most common cause of conflicts is the question: What is the property really worth? Emotional attachments or different market knowledge often lead to price expectations that can differ by up to 30%. An independent market value appraisal is therefore the most important investment in ensuring a smooth process. It neutralises the debate and provides an indisputable data basis for compensating the other heirs. For a quick, data-driven assessment, you can conduct an initial analysis with our ImmoGPT chat or directly request an AI-based valuation that accurately evaluates current market data. An appraisal accepted by all parties accelerates the agreement by an average of 50%. The valuation takes into account all relevant factors:
Location and infrastructure of the property
Year of construction, condition, and renovation needs
Living and land area
Current comparative prices for similar properties in the region
Energy condition and current energy certificate
A clearly defined value is a prerequisite for determining the value of an inherited house fairly. With this fixed value in hand, the next step, the legal structuring of the sale, can be tackled.
Step 2: Seal the sale with a notarial settlement agreement
If the purchase price is determined by the appraisal, the transfer is recorded in a settlement agreement. This contract governs the dissolution of the heirs' community regarding the property and must be notarised to be legally binding. Notary fees are usually around 1.5% to 2.0% of the notarised property value and are typically borne by the purchasing co-heir. A common misconception pertains to the right of first refusal: The legal right of first refusal for co-heirs under § 2034 BGB only applies if an heir sells their *share* to an external third party. No such right of first refusal exists in the sale of the entire property from the heirs' community to a co-heir. The contract provides clear arrangements and is the basis for the transfer of ownership in the land register. A clear contractual arrangement is the cornerstone of any checklist for selling property. Once the ink is dry, the financial aspect of taxes comes into focus.
Step 3: Check and optimise tax burden
Selling to a co-heir offers significant tax advantages. The most important point: no property transfer tax is incurred, as the acquisition occurs directly in line with the dissolution of the community, resulting in savings of 3.5% to 6.5% of the purchase price. The inheritance tax has already been levied on the inheritance share itself and is not triggered again by the internal sale. The critical factor is the speculation tax: it applies if less than ten years have passed between the purchase by the bequeather and the sale by the heirs. However, a ruling by the Federal Finance Court in 2023 clarified that acquiring shares of inheritance from co-heirs is not considered a classic acquisition process in terms of the speculation period. This significantly reduces the risk of an unexpected tax burden. Nonetheless, a precise examination of the deadlines is essential. Use our Inheritance Tax Calculator for initial guidance. Resolving these tax issues is crucial before the purchasing heir proceeds with financing the payout amount.
Step 4: Ensure financing of the payout amount for the buyer
The inheriting co-heir must compensate the other heirs according to their inheritance share. Such sums are rarely available from personal funds, necessitating property financing. Banks scrutinize these applications carefully and require a current, credible market value appraisal as a key document. A professionally prepared appraisal, such as the one offered by Auctoa, can accelerate the loan approval by up to 30%, as it provides the bank with the necessary assurance of the property's value. The payout amount is calculated from the market value minus the buyer's own inheritance share. For example, for a value of €400,000 and four heirs with equal shares (each €100,000), the buyer must pay €300,000 to the three co-heirs. A sale below value to relatives is not a solution here, as the tax office can consider the difference as a gift and tax it. Solid financing is the penultimate step to successfully concluding the process and avoiding the worst-case scenario.
Step 5: Understanding the partition auction as a value-destroying last resort
If the heirs absolutely cannot agree, any co-heir can apply for a partition auction at the competent district court at any time. This procedure is a form of compulsory auction with the aim of converting the indivisible asset (the property) into divisible money. However, this route is almost always the worst of all options. Properties often achieve only 70-85% of their actual market value at a partition auction. In addition, there are significant costs for the court, the appraiser and any lawyers, which further reduce the proceeds and must be borne proportionally by all heirs. The auction is a public, uncontrollable process that minimizes the financial return for all parties involved and often permanently damages family relationships. It should therefore be avoided at all costs by agreeing on a fair, appraisal-based way to fairly divide an inherited property. A structured sale is always the better alternative.
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Selling an inherited property to a co-heir doesn't have to be a minefield. A structured process that begins with an objective valuation and culminates in a notarial contract is the safest route to a fair outcome for everyone. By meticulously observing tax regulations and maintaining transparent communication, the biggest pitfalls – loss of value and disputes – can be effectively avoided. A data-driven approach transforms an emotionally charged situation into a clear financial transaction, securing the inheritance rather than jeopardising it.
Additional useful links
Statistisches Bundesamt offers detailed information on construction prices and the real estate price index in Germany.
Deutsche Bundesbank provides the indicator system for the residential real estate market, which includes important data and analyses on real estate development.
Bundesfinanzministerium provides comprehensive information on the rules and aspects of inheritance and gift tax in Germany.
FAQ
How long does it take to sell an inherited property to a co-heir?
The process can take between 3 and 9 months. The duration depends on the speed of reaching an agreement, the preparation of the report, any potential financing approval from the bank, and the scheduling with the notary.
Is a valuation report obligatory for selling to a co-heir?
It is not legally required, but strongly recommended. Without a neutral appraisal, it is hardly possible to reach a fair agreement on the price. The buyer's financing bank will demand a professional valuation at the latest.
Who bears the costs when selling to a co-heir?
The costs for the valuation report are usually shared by the heirs' community. The notary fees and the costs for the land register transfer are typically borne by the purchasing heir alone.
What if the house is still burdened with debt?
Debts are part of the inheritance and are assumed by the community of heirs. When selling to a co-heir, the remaining debts are deducted from the market value to calculate the payout amount. The buyer usually assumes the loan.
Can you reverse the sale to a co-heir?
No, once the partition contract has been notarised and the land register updated, the sale is binding and cannot be easily reversed.
What is the difference between selling the inheritance share and selling the property?
When selling the inheritance share, an heir sells their entire legal position within the community of heirs. When selling the property to a co-heir, the community of heirs transfers only this one asset to a member and often dissolves afterwards.
