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selling an inherited apartment which taxes apply
Have you inherited an apartment and are wondering what taxes apply when selling it? The tax obligations can be complex, but with the right knowledge, expensive mistakes can be avoided. This article shows you how to reduce the tax burden by up to 30% and safely navigate pitfalls.
With access to Google, BORIS, and Deep Research.
When selling an inherited apartment, inheritance tax and capital gains tax may apply.
The 10-year speculation period begins with the purchase by the decedent, not with the inheritance event.
High personal allowances for inheritance tax (e.g., €400,000 for children) significantly reduce the tax burden.
Selling an inherited apartment often raises a central question: What taxes are incurred and how can they be optimised? Many heirs are uncertain whether and when the tax authorities will take a share of the sale proceeds. The two decisive factors are the inheritance tax on the estate and the capital gains tax on the sales profit. Lack of knowledge about deadlines and allowances can quickly diminish the financial benefit of an inheritance. This guide provides you with clear, data-driven guidance to confidently navigate all tax hurdles and fully secure the value of your inheritance.
The Essentials at a Glance
When selling an inherited apartment, inheritance and capital gains tax may apply.
The 10-year speculation period begins with the purchase by the testator, not with the inheritance event.
High personal allowances for inheritance tax (e.g., €400,000 for children) significantly reduce the tax burden.
The sale is exempt from capital gains tax if the testator owned the property for over 10 years, or used it themselves in the year of sale and the two preceding years.
Selling more than three properties within five years may be classified as commercial trading, leading to business tax obligations.
Immediately after the inheritance is undertaken, the tax office checks whether inheritance tax is due. The amount of this tax depends on two key factors: the market value of the property and your degree of kinship to the deceased. Fortunately, the legislator has stipulated high personal allowances that often prevent taxation. For spouses and registered civil partners, an allowance of 500,000 euros applies, and for children, it is 400,000 euros per parent. Only the value exceeding this threshold is taxed at all. Even for a property worth 600,000 euros, a child would only have to pay tax on 200,000 euros. Therefore, an accurate valuation is crucial. With our inheritance tax calculator, you can quickly calculate your anticipated burden. However, this initial tax has nothing to do with the duties incurred from a later sale.
If you plan to sell the inherited apartment, the speculation tax comes into focus. This tax applies to the profit from the sale if less than ten years have passed between the original purchase and the current sale. What matters here is not the time of inheritance but the purchase date by the deceased. You take over their deadline. If the deceased acquired the apartment eleven years ago, your sale today is completely tax-free. This takeover of the holding period benefits over 90% of inheritance cases. However, there is an important exception that allows a tax-free sale even within the ten-year period: personal use. If the apartment has been used exclusively for residential purposes in the year of sale as well as the two preceding calendar years, the tax does not apply either. This applies both to usage by the deceased and by you as the heir. Find out more about the sale of a property under 10 years. Calculating the taxable profit is the next logical step.
If capital gains tax is indeed due because the deadlines have not been met, you must determine the taxable profit. The formula is simple: sales proceeds minus the original purchase price and sales ancillary costs. Deductible costs include, for example, notary fees, land registry fees, and brokerage commissions, which often account for 3.57% to 7.14% of the sale price. Modernisation expenses from the first three years after the original purchase can also be taken into account. An example: An inherited apartment is sold for 350,000 euros. The testator had acquired it for 250,000 euros. The selling costs amount to 15,000 euros. The taxable profit is thus 85,000 euros (350,000 - 250,000 - 15,000). This profit is taxed at your personal income tax rate, which can be up to 45%. Accurate documentation of all costs is therefore worth real money. Use our calculator for sales proceeds to create a detailed calculation. But caution is advised if you have inherited several properties.
An often overlooked risk is the so-called three-property limit. If you sell more than three properties within five years as a private individual, the tax office classifies you as a commercial property dealer. The consequence: In addition to income tax, trade tax is also levied on the profit. The good news for heirs: Generally, properties acquired through inheritance are not counted in this tally. However, this only applies as long as you do not undertake substantial value-enhancing measures before selling. The following activities may be deemed commercial:
Extensive modernisations that create a new condition
Subdivision of a property into several plots
Development of building land
Active advertising and marketing like a developer
The line between private asset management and commercial trading can be blurred. A thorough review of your checklist for property sales is essential here. To correctly assess all these tax aspects, one factor is non-negotiable: the precise value of the property.
The market value is the key figure that influences almost all tax calculations. It serves as the basis for determining inheritance tax and is also the starting point for calculating potential speculative profit. An inaccurate estimate can quickly lead to a tax burden that is 10-15% too high. The tax office usually accepts the value determined in the certificate of inheritance or by an appraiser. A professional, data-driven evaluation protects you from excessive demands and creates legal certainty. Are you wondering what your inherited house is really worth? A AI-supported analysis from Auctoa provides you with an objective market value in just a few minutes and reveals data-based sales opportunities. Start now for free with our ImmoGPT chat to get an initial assessment. This ensures that you fulfill your tax obligations on a solid foundation.
The sale of an inherited apartment doesn't have to be a tax trap. By knowing the rules regarding inheritance and capital gains tax, and paying attention to the key deadlines, you can strategically minimise your financial burden. The main levers are utilising the high personal allowances and carefully examining the ten-year period. A professional property valuation forms the foundation for all further steps and provides you with the necessary security in relation to the tax office. Don't act hastily; instead, plan the sale strategically. This way, you not only secure the maximum proceeds but also turn your inheritance into a real financial gain.
The Federal Ministry of Finance provides comprehensive information on inheritance and gift tax.
The Federal Ministry of Finance offers an article on the application of regulations for valuing real estate within the framework of inheritance and gift tax.
Laws in the Internet offers access to the complete Inheritance and Gift Tax Act (ErbStG).
Laws in the Internet allows access to the complete Valuation Act (BewG).
The Federal Statistical Office provides information on construction prices and the property price index.
The Federal Statistical Office provides tables on house prices and building land prices.
The Savings Bank offers information on speculation tax when selling a property.
KSK-Immobilien provides a guide on the tax-free sale of an inherited property.
What specific taxes are incurred when selling an inherited apartment?
There may be two main taxes: First, the inheritance tax on the value of the property, minus your personal allowances. Second, the capital gains tax on the profit from the sale, if the property is sold within ten years after it was acquired by the decedent and was not used for personal residence.
What is the difference between inheritance tax and capital gains tax?
The inheritance tax is levied on the transfer of assets from the decedent to you as the heir. The capital gains tax is an income tax on the profit you make if you sell the inherited property shortly after acquiring it.
How can I legally avoid the capital gains tax?
You can avoid the tax by waiting out the 10-year holding period of the decedent. Alternatively, you can move into the apartment and take advantage of the owner-occupancy rule: If you use the apartment yourself in the year of sale and in the two preceding years, the sale is also tax-free.
Does an inherited property count towards the three-property rule?
Usually not. A property acquired solely by inheritance and subsequently sold is not counted towards the three-property rule. However, caution is advised if you undertake extensive refurbishments before the sale that significantly increase the value. In such a case, the tax office might consider it a commercial activity.
Which costs can I deduct from the sale profit?
If capital gains tax applies, you can reduce the taxable profit. Deductible costs include the original purchase price paid by the decedent, as well as all additional selling costs such as notary fees, land registry costs, and brokerage fees.
Why is a professional property valuation so important?
An exact valuation is the basis for calculating inheritance tax and any possible capital gain. A comprehensive valuation from Auctoa protects you from an excessive tax assessment by the tax office and provides a reliable basis for your sales decision.
