Are you faced with the task of having a property appraised in an inheritance case? An accurate property valuation is crucial for inheritance tax and a fair division of the estate. Learn how to avoid pitfalls and determine the value correctly.
Chat with ImmoGPT for free now.
With access to Google, BORIS, and Deep Research.
The topic briefly and concisely
The market value (fair value) is the basis for inheritance tax and is determined by the tax office using standardised methods (comparative, income, asset value methods) in accordance with the Valuation Act (BewG).
An appraisal report presented by heirs can demonstrate a lower, more realistic property value and thus reduce the inheritance tax (§ 198 BewG).
The Annual Tax Act 2022 introduced adjustments in the income and asset valuation methods, which may tend to lead to higher valuations and require careful examination.
Have you inherited a property and are wondering how to determine its value correctly for the tax office and potential co-heirs? The valuation of property in the event of inheritance is a complex process with direct implications on your financial situation, particularly the amount of inheritance tax. An accurate valuation according to the provisions of the Valuation Act (BewG) is essential. This article guides you through the various procedures, highlights potential optimisation opportunities, and explains how an independent appraisal can help you achieve a fair valuation and possibly save on taxes.
Understanding the Basics of Property Valuation in the Event of Inheritance
In the event of inheritance, the exact property valuation for inheritance is of central importance. The tax office requires this value to determine the inheritance tax. Since the inheritance tax reform in 2009, the market value, also known as the fair value, serves as the basis. This value is intended to reflect the price that could be achieved in the ordinary course of business.
The Valuation Act (BewG) regulates the various methods of valuation. An accurate valuation can significantly affect your tax burden. Often, the value determined by the tax office is standardised and does not take into account all the individual characteristics of the property. Therefore, it is important to know the basics and your options. Understanding these processes is the first step towards a fair tax assessment.
Mastering the statutory valuation procedures of the tax office
The tax office uses standardized procedures for property valuation in the event of inheritance, as outlined in the Valuation Act (BewG). There are primarily three methods: the comparative value method, the income value method, and the asset value method. The method used depends on the type of property.
Here is an overview of the methods:
Comparative Value Method (§ 183 BewG): Applied to single-family and two-family homes as well as condominium ownership, when comparable values of similar properties are available. The data often comes from expert committees.
Income Value Method (§§ 184-188 BewG): Used for rental residential properties and commercial properties. The value is based on potential rental income.
Asset Value Method (§§ 189-191 BewG): Used when the other methods are not applicable, for instance, for other developed properties, or when no comparable or rental data are available. It is based on construction costs and land value.
For undeveloped properties, the value is generally determined by multiplying the area by the standard land value. These valuation methods are complex, but understanding them is crucial.
Recognize market value (fair value) as a decisive factor
The market value, referred to as "common value" (§ 9 BewG) in the assessment law, is the central point in property valuation in cases of inheritance. It is defined as the price that could be achieved in normal business transactions considering the nature of the asset upon sale. All circumstances influencing the price must be taken into account, except for unusual or personal conditions.
The tax office often determines this value schematically, without an on-site inspection. This can lead to factors that reduce value, such as building damage, a backlog of modernisation work, or an unfavourable location, not being sufficiently considered. A discrepancy between the value set by the tax office and the actual market value can result in unjustifiably high inheritance tax. Therefore, the precise determination of the market value is an important approach to tax optimisation.
Objection and Expert Opinion: Using Your Rights with the Tax Office
If the standard valuation by the tax office results in a value that you believe is too high, you have the right to contest it. According to section 198 of the Valuation Act, you can prove a lower common value with an expert opinion. This opinion should be prepared by a qualified, certified expert, for example, by individuals accredited according to DIN EN ISO/IEC 17024.
Such an expert opinion takes into account the individual characteristics of the property in more detail than the general methods of the tax office. The cost of an expert opinion can quickly pay off if it leads to a significant reduction in inheritance tax. If the property is sold at a lower price within one year of the inheritance, this sale price can also serve as evidence of a lower value. Inform yourself about your legal options.
Consider the latest changes in legislation (JStG 2022) and their impact
With the Annual Tax Act 2022 (JStG 2022), the regulations for property valuation according to §§ 176 ff. BewG were adapted to the Real Estate Valuation Ordinance (ImmoWertV). These changes apply to all valuation dates after 31.12.2022. The aim was to adjust the statutory valuation factors, particularly property interest rates and valuation factors (value figures), to the current real estate market.
The changes primarily affect the income and cost approach. The following aspects were adjusted:
In the income approach: Modified determination of management costs, adjusted statutory property interest rates, and a re-evaluation of the remaining useful life. For example, the total lifespan for many residential properties was increased from 70 to 80 years.
In the cost approach: Introduction of a regional factor, a new method for calculating age depreciation and adjusted value figures.
These adjustments can, in some cases, lead to higher property values and thus result in higher inheritance tax. A thorough examination and, if necessary, a strategy adjustment are therefore advisable.
Harness specific factors and optimization potentials in property valuation
In addition to general valuation methods, there are specific factors that affect the value of a property in the event of inheritance and offer potential for optimization. For rented residential properties, a value deduction of 10% on the determined value can be granted (§ 13d ErbStG), provided the property is located within the EU/EWR and does not belong to an operating asset.
Encumbrances such as usufruct or living rights also significantly reduce the value of the property. The capital value of such rights is deducted from the property's value and can substantially reduce the tax burden. Expert knowledge is often required for an accurate calculation of these value-influencing factors. Use our inheritance cost simulator for an initial assessment.
grundstucksbewertung-erbschaft
The property valuation in the case of inheritance is a crucial step that requires careful attention. Having an accurate understanding of the valuation procedures and your rights can help you ensure fair taxation and avoid financial disadvantages. The tax office applies standardized procedures that do not always reflect the actual value.
With a qualified expert appraisal, you can often demonstrate a more realistic and potentially lower value. Given the complexity and recent legislative changes, professional advice is often essential. Plan early and take advantage of all optimization opportunities. For initial guidance or a detailed assessment, the experts at Auctoa and our ImmoGPT-Chat are available to assist you.
Additional useful links
Bundesfinanzministerium provides comprehensive information on inheritance and gift tax in Germany.
The portal Gesetze im Internet offers the full text of the Valuation Act (BewG), which governs the legal basis for property valuation.
Stiftung Warentest explores in an article how tax offices determine the market value of real estate.
The specialist publisher Haufe provides a detailed article on the valuation of real estate for inheritance tax purposes.
The Deutsche Bundesbank publishes reports and analyses on the real estate market in Germany.
FAQ
How is the value of a property determined for inheritance tax purposes?
The tax office determines the market value (common value) of the property based on the procedures stipulated in the Valuation Act (BewG): comparative value, capitalised earnings, or cost approach, depending on the type of property.
What can I do if the tax office assessment is too high?
You can substantiate a lower value with an appraisal from a qualified expert (§ 198 BewG) or, if the property is sold in the near future, potentially use the achieved sale price.
What role does the standard land value play in property valuation?
The standard land value, determined by expert committees, is an important basis for valuation, especially for undeveloped land (multiplying with the area) and as a component in the income and material value method.
Are there deductions for rental properties?
Yes, for properties rented for residential purposes that are not part of business assets and are located in the EU/EEA, a valuation deduction of 10% on the determined value may be granted (§ 13d ErbStG).
How do usufruct rights or rights of residence affect the value?
Usufruct or rights of residence reduce the taxable value of the property, as they represent an economic burden for the heir. The capital value of these rights is deducted from the market value.
What changed with the Annual Tax Act 2022?
The JStG 2022 has adjusted the valuation rules, particularly in the income and asset value methods, to align with the Real Estate Valuation Regulation. This can lead to higher property values, for example, due to changed overall useful life, property interest rates, and value numbers.
