Have you inherited a property and anticipate a high selling price? Before planning what to do with the money, it's crucial to understand the costs and taxes involved. This guide will show you exactly what remains from the proceeds.
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The topic briefly and concisely
The net proceeds from an inherited house are the selling price minus inheritance tax, speculative tax, estate agent and notary costs, as well as any additional fees.
Inheritance tax depends on allowances (e.g. €400,000 for children), while capital gains tax is waived after 10 years of ownership by the deceased or if the property is used as a primary residence.
The direct sales costs for agents and notaries alone quickly amount to over 5% of the notarized purchase price.
Selling an inherited house often comes with high expectations, but the sale proceeds indicated on paper rarely go straight into your account. Between the notary appointment and the receipt of funds, there are several deductions that can significantly reduce the final amount. From inheritance tax to the speculation period, and including notary and estate agent fees – each item diminishes the profit. A thorough understanding of these factors is essential to plan realistically and avoid disappointment in the end. We break down for you which costs arise and how you can calculate your true net proceeds.
Key Takeaways: An Overview of the Central Deductions
When selling an inherited house, four main factors determine what remains in the end. These directly affect the final payout amount.
Inheritance Tax: Depending on your degree of kinship and the property's value, between 7% and 50% may go to the tax office after deducting allowances.
Speculation Tax: Applies if less than 10 years have passed between the purchase by the deceased and your sale, and the property was rented out.
Selling Costs: These include broker commission (approx. 3.57% for you), notary and land registry fees (approx. 2%), as well as costs for appraisals and energy certificates (up to 500 €).
Maintenance Costs: Necessary repairs or renovations before the sale can reduce the proceeds by thousands of euros but often increase the achievable price.
These four items are the essential variables in the equation that determines your net proceeds.
Inheritance tax: The first deduction from property value
Before you sell the house, the tax office checks the inheritance tax. The amount depends on the market value of the property and your degree of relationship to the deceased. Fortunately, there are high allowances that often prevent taxation.
The personal allowances are clearly graded:
Spouses and registered civil partners: €500,000
Children and stepchildren: €400,000
Grandchildren: €200,000
Parents and grandparents: €100,000
Siblings, nieces/nephews and all other heirs: €20,000
Only the amount that exceeds the respective allowance is taxed. A house inherited from parents valued at €450,000 would result in a tax burden of 7% on the exceeding €50,000 for a child, which means €3,500. With an inheritance tax calculator, you can quickly determine your anticipated burden. Next, another possible tax to check is the speculation tax.
Avoid speculation tax: The 10-year period is crucial
The speculation tax is an income tax on the profit from private sales transactions. It applies when you sell the inherited property at a profit before the ten-year speculation period has expired. What matters here is not the date of inheritance, but the purchase date by the decedent. You essentially take over the period.
There are two important exemptions to avoid this tax:
The property was acquired by the decedent more than 10 years ago.
The property was used exclusively for personal residential purposes in the year of sale and the two preceding years (self-use).
If the decedent bought the house in 2012, you can sell it tax-free from 2023 onward. If you've lived in it yourself since December 2022 and sell it in January 2024, the tax is also waived. A careful examination of the periods is essential, as our article on the speculation period for inherited houses illustrates in detail. After taxes, direct selling costs follow.
Quantify sales costs: Budget up to 15% of the revenue
Estate Agents, Notary and Other Fees Reduce the Proceeds
The direct costs of selling can quickly add up to 5% to 15% of the notarised purchase price. You should include these in your calculations from the outset. The largest items are clearly defined.
Estate Agent's Commission: Shared Costs Since 2020
Since December 2020, the "Act on the Distribution of Estate Agent Costs" has been in effect, whereby buyers and sellers typically share the commission. Each typically pays 3.57% of the purchase price, including VAT. For a sale price of €400,000, that amounts to €14,280 for you.
Notary and Land Registry Fees: Statutory Rate Around 2%
No sale without a notary and land registration. The fees for these are set in the Court and Notary Fees Act (GNotKG) and amount to about 1.5% to 2.0% of the purchase price. These costs are non-negotiable and always apply.
Other Costs: From Appraisals to Energy Certificates
In addition, there are often smaller but necessary amounts. These include the costs for obtaining an energy certificate, which is legally required and costs between €50 and €500 depending on the type. If you need a detailed market value appraisal to determine the price, this can cost 0.5% to 1.5% of the property's value. A comprehensive checklist for the sale helps to ensure nothing is overlooked. However, not all costs are so easily quantified.
Uncover hidden costs: Renovation needs and ongoing expenses
The condition of the inherited property has a dual impact on your net proceeds. A house in need of renovation fetches a sale price 20-30% lower or requires significant investment before selling. Even minor cosmetic repairs can quickly incur costs of €2,000 to €5,000.
Also, do not forget the ongoing costs incurred between inheritance and sale. Property taxes, insurance, heating, and electricity add up to several hundred euros per month quickly. The longer the sales process takes, the higher these deductions become. A quick and data-driven valuation, such as the one offered by Auctoa, can accelerate the process by up to 40%. Another cost factor can be the community of heirs.
Special Case: Inheritance Community - Consensus as a Cost Factor
If several people inherit together, they form an inheritance community. All decisions, including the sale, must be made unanimously. Disagreement often leads to delays, which can incur ongoing costs of hundreds of euros per month. If the heirs cannot agree, a division auction becomes a last resort. This judicial procedure is not only lengthy but typically results in a sale price 15 to 30% below the open market value. Clear communication and a neutral assessment as a basis for discussion are crucial here to avoid financial losses. You can learn more in our guide to selling a house from an inheritance community. How all these factors have a concrete impact is shown in an example calculation.
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To illustrate the deductions, a specific example calculation is helpful. Suppose you, as the only child, inherit a house and sell it for €400,000. The deceased had acquired it 12 years ago.
Selling price: €400,000
Less broker's commission (3.57%): -€14,280
Less notary & land registry costs (approx. 2%): -€8,000
Less energy certificate & miscellaneous: -€500
= Subtotal (pay-out): €377,220
Now to the taxes:
Inheritance tax: The value of the house (€400,000) matches your tax allowance as a child exactly. No inheritance tax is due.
Speculation tax: As the house was bought more than 10 years ago, this tax is also not applicable.
So, in this optimal case, €377,220 remain from the €400,000 sale proceeds. The selling costs amount to €22,780. A precise evaluation of the inherited house is the first step towards such a clear calculation.
Conclusion: Proactive planning maximises your net proceeds
Do I have to sell an inherited house immediately?
No, there is no obligation to sell immediately. However, you should consider the ongoing costs (property tax, insurance, etc.) that can reduce the value of the inheritance. A quick decision can help minimize these costs.
What happens if the inherited house still has outstanding debts?
The debts (mortgage) will be paid off with the proceeds from the sale. The notary will manage the settlement with the bank. Only the amount remaining after deducting the outstanding debt and all sale costs will be available to you.
Who pays the costs when an inheritance community sells?
The costs are paid from the proceeds of the sale before the remaining amount is divided among the heirs. Therefore, each heir bears the costs according to their share of the inheritance. Each heir pays their personal inheritance tax individually.
Can I pay the inheritance tax in instalments?
In certain circumstances, yes. If paying the inheritance tax immediately would cause significant hardship (e.g., because you will only have the money after the sale), you can apply to the tax office for a deferment or payment in instalments. However, this is at the discretion of the authorities.
What is the difference between the market value and the sale price?
The market value is the objectively determined value that a property could achieve on the market and serves as the basis for inheritance tax. The actual sale price is the price you negotiate with a buyer and can be above or below the market value, depending on market conditions and demand.
What role does the energy certificate play in the sale?
The energy certificate is legally required and must be presented to potential buyers at the latest during the viewing. A good energy rating (e.g., class A or B) can positively influence the sale price, while a poor rating (e.g., G or H) can reduce it. As the seller, you bear the costs of obtaining the certificate.
Additional useful links
The Federal Ministry of Finance provides comprehensive information on inheritance and gift tax.
The Federal Statistical Office (Destatis) offers a detailed publication on inheritance and gift tax available as a PDF.
You can also find further information on property tax and land acquisition tax at the Federal Ministry of Finance.
Wikipedia provides an overview of land acquisition tax in Germany.
The Federal Statistical Office (Destatis) provides information on construction prices and the real estate price index.
Current tables on house and building land prices are also available at the Federal Statistical Office (Destatis).
FAQ
Do I have to sell an inherited house immediately?
No, there is no obligation to sell immediately. However, you should consider the ongoing costs (property taxes, insurance, etc.) that diminish the value of the inheritance. A swift decision can help minimise these costs.
What happens if the inherited house is still burdened with debt?
The debts (land charge) will be settled with the proceeds from the sale. The notary will handle the transaction with the bank. Only the amount remaining after deducting the outstanding debt and all sale costs will be available to you.
Who bears the costs when an inheritance community sells?
The costs are settled from the proceeds of the sale before the remaining amount is divided among the heirs. Each heir therefore bears the costs according to their share of the inheritance. Each heir pays their own personal inheritance tax.
Can I pay the inheritance tax in instalments?
Under certain circumstances, yes. If paying the inheritance tax immediately poses a significant hardship for you (for example, because you will only have the money after the sale), you can apply to the tax office for a deferral or payment by instalments. However, this is at the discretion of the authority.
What is the difference between market value and selling price?
The market value is the objectively determined value that a property could achieve on the market and serves as the basis for inheritance tax. The actual sale price is the price you negotiate with a buyer and can be above or below the market value depending on market conditions and demand.
What role does the energy certificate play in the sale?
The energy certificate is legally required and must be presented to potential buyers at the latest during the viewing. A good energy rating (e.g., class A or B) can positively influence the sale price, while a poor rating (e.g., G or H) may reduce it. You, as the seller, bear the costs for its preparation.
