Have you inherited a property and are now facing the inheritance tax return? The tax office often determines the value according to rigid formulas that ignore the actual condition of your property. This can lead to an unjustifiably high tax demand of several thousand euros.
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The topic briefly and concisely
The tax office often values inherited properties above market value because it uses standardised procedures without conducting a site visit.
Heirs have the right under § 198 BewG to prove a lower property value with a qualified appraisal and thus save on inheritance tax.
A market value appraisal must be prepared by a certified expert (e.g., according to ISO 17024) in order to be recognised by the tax office.
The valuation of an inherited property is a critical moment that determines the amount of your inheritance tax. The tax office uses standardised procedures that often overestimate the actual market value by 20% or more, as individual features such as renovation needs or a poor location are not taken into account. This article explains the tax office's valuation methods, shows you your right to prove a lower value, and how you can significantly reduce your tax burden through a qualified appraisal. This way, you ensure that you only pay the amount of tax that corresponds to the true value of your inheritance.
Understanding and questioning the standard assessment of the tax office
When faced with an inheritance case, the tax office determines the value of your property to assess the inheritance tax. This is done based on the Valuation Act (BewG) in an automated process, usually without an on-site inspection. The standard land value often serves as a central basis, which is an average value that ignores individual property features such as building damage or an unfavourable layout. This blanket calculation often results in a value that is up to 30% above the actual market value. The outcome is a potentially inflated tax demand that unnecessarily strains your financial situation. It is therefore crucial to understand the tax office's methodology to pave the way for a fair assessment.
The three valuation methods analysed by the tax office
The Comparative Value Method for Standard Properties
For owner-occupied apartments and single-family homes in common areas, the tax office primarily uses the comparative value method. In this process, the sale prices of at least five similar properties from the recent past are used as a reference. However, if there are not enough comparable sales, which is often the case in rural or very specific locations, the estimate becomes inaccurate. A lack of direct comparison can distort the valuation by over 15%.
The Income Value Method for Investment Properties
For rented properties, the income value method is applied, which consists of the land value and the building income value. The calculation is based on the sustainably achievable rental income minus the operating costs, which are generally estimated at 19 to 25%. A high vacancy rate or below-average rents are often not adequately considered in this general estimate. A detailed valuation report can set more realistic values here.
The Cost Approach as a Last Resort
If the other two methods do not apply, the cost approach is used. It sums up the construction costs of the building minus depreciation for age and the land value. Since a change in the law in 2023, this method often leads to valuations 20-30% higher than before. This method is the least market-oriented and therefore offers the greatest potential for challenge. Knowledge of these methods is the foundation for enforcing your right to a fair valuation.
Exercising Your Right: Prove the Lower Value
The law explicitly grants you the right to challenge the tax office's assessment. According to § 198 of the Valuation Act (BewG), you can prove a lower fair market value and thus reduce your tax burden. To do this, you must act within the one-month appeal period after receiving the tax notice. The key to success is a qualified market value appraisal prepared by a certified expert. The costs for this appraisal, which are around 0.5% to 1.5% of the property's value, can be deducted from the tax as an estate liability. Such an valuation in the event of inheritance is often a worthwhile investment. For the appraisal to be recognised by the tax office, it must meet strict formal criteria. The following list shows the main requirements:
Expert's Qualification: The expert must be publicly appointed and sworn in or hold certification according to DIN EN ISO/IEC 17024.
Effective Date Principle: The valuation must be conducted exactly on the deceased's date of death.
Completeness: All value-influencing factors such as building defects, maintenance backlog, legal encumbrances (e.g., rights of way), or limited heritage protection must be documented.
Traceability: The methodology and data used must be fully and coherently presented to the tax office.
Engaging the right expert is therefore the next logical step.
Avoid costly valuation errors
In the process of valuing an inherited property, there are several pitfalls that could cost you thousands of euros. A proactive approach is essential to avoid these. The most common mistake is passively accepting the first notice from the tax office without critically examining the value. Often, the one-month deadline for objection is missed, making the excessive value legally binding. Another mistake is hiring an unqualified surveyor whose expertise does not meet the tax office's requirements. To ensure you determine the correct value of your inherited home, you should consider the following points:
Keep an eye on deadlines: Note the one-month objection period immediately after receiving the notice.
Gather documents: Collect all relevant documents such as land register excerpts, building plans, and evidence of renovations or defects early on.
Document value-reducing factors: Have aspects such as asbestos contamination, outdated heating systems, or legal restrictions evaluated by an expert.
Choose a qualified surveyor: Check the certification of the expert (e.g., according to ISO 17024) before commissioning a survey.
Careful preparation and choosing the right partner protect you from financial disadvantages and accelerate the entire process.
Digital tools to accelerate your assessment
Previously, creating a market value report was a process that took weeks. Today, digital solutions can significantly expedite the path to a fair evaluation. AI-powered analysis tools provide a well-founded initial assessment of the property's value within just 48 hours. These data-driven valuations analyze thousands of comparable properties, considering real-time market data. With our inheritance tax calculator, you can get a preliminary indication of your potential tax liability. For legally secure evidence to submit to the tax office, Auctoa offers a digital assessment that meets all requirements of § 198 BewG. You will receive an appraisal reviewed by certified partners, which will form the basis for your tax return. Use our free ImmoGPT chat to address initial questions and start the process. These digital aids not only save time but also provide a precise data foundation for your subsequent actions.
Conclusion: Proactive action safeguards your assets
The valuation of an inherited property by the tax office is not an immutable verdict. It is an initial, often inaccurate estimate, which you as an heir should not accept without examination. The legislator provides you with the right to prove a lower common value, an effective tool to reduce your inheritance tax by up to 30%. The key lies in understanding the standardised methods of the tax office and proactively countering them with a qualified market value appraisal. Investing in a professional appraisal is one of the safest methods to protect the true value of your inheritance. The value of your inheritance should be determined by facts, not by the blanket assumptions of the tax authorities.
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Additional useful links
The Federal Ministry of Finance offers comprehensive information on inheritance and gift tax.
An article by the Federal Ministry of Finance explains the application of regulations concerning the valuation of real estate in the context of inheritance and gift tax.
The North Rhine-Westphalia tax office provides forms for inheritance and gift tax.
The Federal Statistical Office provides information on construction prices and real estate price indices.
Tables from the Federal Statistical Office offer detailed data on house and land prices.
BORIS-D is the central information system of the expert committees for property values in Germany.
The Federal Ministry of Finance answers frequently asked questions about the new property tax.
The appraisal committees publish the real estate market report Germany 2023.
FAQ
Do I have to accept the value estimated by the tax office for my inherited property?
No. You have the legally established right (§ 198 BewG) to prove a lower actual market value. This is done by submitting a qualified market value appraisal.
What are the benefits of an appraisal from Auctoa?
Auctoa combines AI technology with the expertise of certified appraisers. You receive a quick, data-driven, yet legally compliant evaluation that meets all the formal requirements of the tax authorities and helps you save time and taxes.
What happens if I miss the deadline for lodging an appeal?
If you miss the one-month objection period, the value determined by the tax office becomes legally binding. A later correction is then only possible in very rare exceptional cases. Therefore, it is crucial to act quickly.
Will the costs for the report be reimbursed?
The costs are not directly reimbursed, but they can be fully deducted from inheritance tax as a liability of the estate. Therefore, they reduce the tax base and directly lower the tax burden.
Is a short appraisal sufficient for the tax office?
No, not usually. The tax office requires a comprehensive market value appraisal that is conclusive, comprehensible, and prepared by a certified expert. Short appraisals generally do not meet these strict requirements.
Can I use a sale price as proof?
Yes, a sales price achieved shortly after the inheritance (usually within a year) in a regular business transaction can serve as strong evidence for the lower fair market value and be accepted by the tax office.
