An inherited property often raises complex questions: sell, rent, or use it yourself? Selling to a sibling, in particular, presents emotional and financial challenges. This article explains how to structure the terms for selling an inherited property to siblings in a legally secure and tax-advantageous way.
Chat with ImmoGPT for free now.
With access to Google, BORIS, and Deep Research.
The topic briefly and concisely
When selling an inherited property to siblings, the full real estate transfer tax is applicable, as they are not considered direct relatives.
A sale price significantly below the market value can be considered a mixed gift by the tax office, with only an allowance of €20,000 applicable for siblings.
An objective property valuation by an expert is crucial to avoid disputes and establish a fair price basis recognised by the tax authorities.
Are you facing the challenge of selling an inherited property to your sister or brother? This situation requires more than just a family agreement; it demands clear, fair, and legally safeguarded conditions. Many heirs underestimate the tax pitfalls and potential for conflict that arise from incorrect pricing. An ill-considered sale can not only disrupt family harmony but also lead to significant back payments to the tax authorities. We guide you through the essential steps—from accurate valuation and tax obligations to contract design—so that the sale results in a positive outcome for all parties involved.
The Community of Heirs as a Legal Starting Point
Upon inheritance, several heirs automatically form an inheritance community, known as a joint ownership community. This means the inherited property belongs to all co-heirs collectively and no one can dispose of their share alone. Every decision, particularly the sale, requires the consent of all members – unanimity that is often challenging to achieve in practice. A popular solution is for one heir to take over the property and compensate the other co-heirs. This process, also called separation, dissolves the inheritance community concerning the property. The determination of the compensation amount is based on the property's current market value, highlighting the importance of an objective valuation. Without a clear agreement on the value and selling modalities, prolonged conflicts may arise, blocking the process. This sets the stage for the tax considerations that must be clarified next.
Tax Pitfalls in Selling to Siblings
The sale of an inherited property to siblings is a tax-relevant transaction that is often misjudged. Many assume a general tax exemption within the family, which is a costly mistake. Here are the three most important types of taxes you need to know:
Real Estate Transfer Tax: Contrary to popular belief, sales between siblings are not exempt from real estate transfer tax. This exemption only applies to direct family members (parents, children, spouses). Siblings are considered collateral relatives, meaning the buyer must pay the full real estate transfer tax, which can be up to 6.5% of the purchase price depending on the federal state.
Gift Tax: If the property is sold significantly below market value, the tax office may assume a mixed gift. Gift tax is then due for the unpaid portion. The allowance for siblings is very low at only €20,000 every ten years. Every euro over this allowance is taxed at a minimum of 15%.
Speculation Tax: This tax on the sales profit is waived if the decedent acquired the property more than ten years ago. The period of ownership by the decedent is credited to the heir. A careful examination of this period is essential.
A thorough understanding of these taxes is the basis for determining a fair and realistic sale price.
Objectively determine the fair selling price
Determining the purchase price is the most sensitive point when selling to siblings. A price that is too low can alert the tax office and trigger gift tax. A price that is too high disadvantages the purchasing sibling and can lead to disputes. Therefore, a professional and neutral property valuation is not an optional expense but a necessity for a transparent process. An appraisal provides a comprehensible basis that is accepted by all parties and also by authorities. A sale price that is more than 10-20% below the determined market value is often classified as a mixed gift by the tax office. To obtain an initial, data-driven assessment, digital tools like Auctoa ImmoGPT can be a valuable aid. They quickly provide a realistic price range and help align the expectations of all parties involved. With a clear understanding of the property's value, the next step, the contractual agreement, can be taken with confidence.
The notarised purchase contract as legal protection
Verbal agreements have no legal binding in property sales. Every property transaction in Germany must be notarised to be valid. The notary acts as a neutral entity and ensures that the contract complies with legal requirements and both parties' interests are protected. A well-drafted partition agreement that governs the sale is key to dissolving the community of heirs. The following points must be clearly stipulated in the contract:
The precise names of the sellers (all co-heirs) and the buyer.
An exact description of the property according to the land register entry.
The agreed purchase price and payment terms (e.g., due date).
The date of transfer of ownership, use, and liabilities.
Provisions regarding the warranty for defects.
The confirmation of payment to departing heirs.
This formal act not only protects against future legal disputes but is also a prerequisite for registering the change of ownership in the land register. However, alternatives should be considered before reaching this stage.
Evaluate meaningful alternatives to direct sales
Not always is the direct sale to a sibling the best or only possible solution. Depending on the situation of the group of heirs and the nature of the property, other options should also be considered. A well-thought-out decision-making guide for the group of heirs can provide clarity here. The most risky alternative is partition auction. It is often seen as a last resort when no agreement is reached, but it frequently leads to financial losses of up to 30% of the market value and destroys family harmony. Better options often include:
Joint Rental: The group of heirs remains and shares the rental income. This requires good understanding and shared management effort.
Real Partition: If the property is suitable (e.g., a multi-family house), it can be divided into separate residential units, allowing each heir to become the sole owner of a unit.
Sale to Third Parties: If no sibling can or wants to take over the property, selling on the open market is often the fairest solution, as the proceeds are clearly quantifiable and divisible.
The choice of the right path depends on the goals and willingness to cooperate of all the heirs.
Conclusion: Clarity and fairness as the highest commandment
The sale of an inherited property to siblings is a process that must be characterised by transparency, fairness, and legal diligence. The greatest challenges lie in correct tax handling and objective price determination. The exemption from property transfer tax does not apply to siblings, and a price set too low can quickly become a gift tax trap. Therefore, a professional valuation is essential to create a sound basis for negotiation and to avoid conflicts. A notarised contract provides the necessary legal certainty and a clean conclusion. By clearly defining the terms and considering all eventualities, you not only protect your assets but also maintain peace within the family.
geerbte-immobilie-an-geschwister-verkaufen-konditionen
Additional useful links
The Federal Statistical Office (Destatis) provides current data and statistics on inheritance and gift tax in this press release from July 2024.
Another press release from the Federal Statistical Office (Destatis) from July 2023 also offers data and statistics on inheritance and gift tax.
In the glossary of the Federal Statistical Office (Destatis), you will find relevant definitions on house, property, and real estate assets.
The Federal Ministry of Finance (BMF) provides information on its official page about the legal bases and contact persons for inheritance and gift tax.
The Tagesschau offers an introductory article with the latest news on inheritance and gift tax.
An article by Zeit Online examines the transfer of assets through inheritance and gifts, as well as the associated taxes.
Haufe offers an article with tax aspects and tips regarding inherited and gifted assets in 2023.
FAQ
Is a valuation report mandatory when selling to siblings?
There is no legal obligation for a valuation report. However, it is strongly recommended in order to find a fair price, avoid disputes, and have a solid basis for the tax office, which could interpret an unrealistically low price as a gift.
Who bears the costs when selling property to siblings?
Generally, the buyer bears the ancillary purchase costs. These include the real estate transfer tax (ranging from 3.5% to 6.5% depending on the federal state), notary fees and the costs for registration in the land register (together approximately 1.5% - 2.0% of the purchase price). The cost of an appraisal can be shared.
What is a mixed donation?
A mixed gift occurs when a property is deliberately sold at a price that is significantly below the actual market value. The difference between the price paid and the market value is regarded by the tax office as a gratuitous benefit (gift) and is subject to gift tax if it exceeds personal allowances.
Does the speculation period start anew with the inheritance?
No, the ten-year speculation period does not begin with the date of inheritance. As an heir, you inherit the period from the deceased person. The crucial date is when the deceased originally purchased the property. If this purchase was more than ten years ago, no speculative tax is due.
Can we handle the sale without a notary to save costs?
No, that is not possible. Every property purchase agreement in Germany must be notarised to be legally valid. A contract concluded without a notary is ineffective, and ownership cannot be transferred in the land register.
What if one sibling can't buy out the others?
If the sibling taking over cannot pay off the co-heirs (even with a loan), alternatives must be considered. Options include jointly selling the property to a third party and dividing the proceeds, jointly renting it out, or, as a last resort, conducting a partition auction.
