Property Valuation
Renovation Potential Report
Realistically estimate renovation costs for an inherited house
An inherited house – is it a blessing or a financial trap? The renovation costs are often the decisive factor that determines the true value of your inheritance. This guide shows you how to realistically assess the costs of renovating an inherited house, uncover hidden expenses, and make informed decisions.
With access to Google, BORIS, and Deep Research.
A realistic assessment of renovation costs for an inherited house forms the foundation for any strategic decision (selling, renting, personal use).
In the event of a change of ownership through inheritance, a statutory renovation obligation under the GEG comes into effect with a deadline of two years.
Government subsidies (KfW, BAFA) can reduce the costs of energy-efficient renovations by up to 70% and must be applied for before the start of the measures.
Are you facing the task of managing an inherited house? This situation often raises complex questions, especially regarding the renovation costs involved. A miscalculation can quickly lead to a financial burden exceeding 30% of the planned budget. A data-driven, realistic estimation of the renovation costs for your inherited house is therefore not optional but the essential foundation for any strategic decision. Whether selling, renting, or personal use – only with a solid calculation can you secure and increase the value of your property. We guide you through the systematic recording of all cost points, from the initial assessment to the final value enhancement.
The first step towards a realistic cost estimate is a comprehensive inventory. Ask yourself: What is the condition of the central components of the house? A professional building survey, costing between €400 and €950 depending on the scope, provides an objective basis for this and protects against surprises. Particularly with buildings constructed before 1990, there are often undiscovered defects lurking. The analysis should focus on the most expensive potential renovation areas.
A detailed checklist helps to ensure nothing is overlooked. Here are the most critical points:
Roof: Condition of tiles, insulation, and roof structure (costs often start at €20,000).
Heating system: Age and type of system; boilers over 30 years old are often subject to replacement requirements.
Windows: Single-glazed windows can increase heating costs by up to 25%.
Electricity and plumbing: Outdated two-wire systems pose a safety risk and require a complete overhaul at approximately €100 to €170 per square metre.
Facade and insulation: Missing or damp insulation is one of the main causes of high energy costs.
Basement: Damp and mould can cause renovation costs of over €15,000.
A thorough examination of these points is essential. Use digital tools to check renovation needs online and get an initial assessment. This initial analysis forms the basis for all further budget decisions.
After the initial assessment, you can estimate the renovation costs for your inherited house more realistically by using common square metre prices as a reference. These values provide an initial guideline for your budget. The costs vary considerably depending on the extent of the renovation and range from €400 to over €1,600 per square metre. For a 120 m² house, this means a range from €48,000 to €192,000.
Typically, there are three levels of renovation:
Cosmetic Renovation: Painting and new flooring. Expect to spend approximately €400 to €600 per m². These measures enhance the comfort level but only marginally increase the property's value.
Standard Renovation: Renewal of bathroom, windows, and electrical systems. Costs here are around €800 to €1,200 per m².
Core Renovation: Comprehensive renewal including roof, façade, heating, and changes to the layout. Costs start at €1,200 per m² and can exceed €2,000 if the building fabric is poor.
Note that the quality of materials can affect costs by up to 40%. A renovation cost calculator helps you model these variables. However, these figures are just the beginning; legal requirements for energy efficiency may necessitate further investments.
If you have inherited a property, the obligation to renovate in accordance with the Buildings Energy Act (GEG) applies upon a change of ownership. You have two years to comply with the requirements. Otherwise, fines of up to €50,000 may be imposed. The main obligations include replacing boilers that are more than 30 years old and insulating the top floor ceiling.
Moreover, since 2024, there is a rule that newly installed heating systems must be operated with at least 65% renewable energy. This temporarily increases investment costs but reduces operating costs by up to 50% in the long term. Fortunately, you do not have to bear these costs alone. The government supports you with extensive funding programmes:
KfW Loan 261: Low-interest loans of up to €150,000 with repayment grants of up to €37,500 for renovation to an energy-efficient house.
BAFA Grants: Direct grants for individual measures like window replacement or new insulation.
Heating Subsidies (KfW): Up to 70% subsidy for the installation of an environmentally friendly heating system.
Applications must be submitted before the start of the measures. A certified energy consultant, whose fee is also subsidised by up to 50%, is often required. Get detailed information about the costs of energy renovation to exploit all potentials. With the right funding, the obligation becomes an opportunity and sustainably increases the value of your property.
Every Euro invested in renovation should ideally increase the property's value by more than one Euro. However, not every measure pays off equally. An energy-efficient renovation can increase the market value by 15-25%, whereas a new luxury bathroom often only adds 50% to the selling price. To evaluate profitability, you need to know the potential market value after renovation.
This is where data-driven tools come into play. Instead of relying on your gut feeling, you can perform an initial AI-supported analysis with the Auctoa ImmoGPT Chat. The tool analyzes thousands of comparable properties and market data to provide an accurate forecast. This way, you can identify which investments are truly worthwhile and which are merely costly. An objective evaluation is key in deciding if a renovation before sale is sensible.
Compare the estimated renovation costs with the projected increase in value. If the expected sales proceeds after costs are significantly higher than the current value, the investment is justified. A precise answer to the question “What is my inherited house worth?” is therefore the most important step in your strategic planning.
With a clear cost estimate and a valid value forecast, you can make the final strategic decision. The question is no longer just what the renovation costs, but which option promises the highest return for your personal situation. Consider three key factors: your financial situation, your personal use perspective, and current market conditions.
The following steps will help you make the decision:
Scenario 1: Immediate sale (as-is). Calculate the net proceeds after deducting taxes and fees. This is your financial baseline.
Scenario 2: Renovate and sell. Subtract the total renovation costs and a buffer of 15% from the projected new market value. Compare the result with Scenario 1.
Scenario 3: Renovate and rent. Calculate the expected annual cold rent. A rental yield of over 4% is considered attractive in many German cities.
The emotional factor associated with a family home is often underestimated. Therefore, also consider whether personal use is an option. The question of whether a renovation before sale is worthwhile thus depends on hard numbers and soft factors. An informed decision protects your wealth and secures the future of the inheritance.
Accurately estimating the renovation costs of an inherited house is the most important task for any property heir. A systematic survey, the use of cost benchmarks, and knowledge of legal obligations and grants form the foundation for a successful strategy. Don’t rely on estimates; instead, use professional appraisals and digital analysis tools to minimize financial risks. Investing a few hundred euros in an initial consultation can prevent losses of tens of thousands of euros. Auctoa acts as your digital compass, helping you objectively assess the value of your inheritance and make the right decisions for your future.
Wikipedia provides a comprehensive overview and definitions on the topic of renovation in construction.
The Federal Statistical Office (Destatis) offers current information on construction prices and the real estate price index.
Extensive statistics and information on the construction industry can be found on the overview page of the Federal Statistical Office (Destatis).
Specific data on construction price indices are available on the website of the Federal Statistical Office (Destatis).
Tables and data on building permits are published by the Federal Statistical Office (Destatis).
The Federal Ministry for Economic Affairs provides information in its FAQs on the tax incentives for building renovation.
The Federal Government offers up-to-date information on the promotion of new construction and renovation projects.
Wikipedia explains the concept of building in existing structures, which refers to work on existing buildings.
Which renovation costs can I deduct from my taxes?
You can claim 20% of the labour costs for tradespeople (up to €6,000 per year, with a maximum of €1,200) for renovation, maintenance, and modernisation works against taxes. Material costs are not deductible. There is also a separate tax bonus for energy-efficient renovations.
How can I find out if my inherited house has a renovation obligation?
Check the construction year of the house and the age of the heating system. If the boiler is over 30 years old or the house was built before 1 February 2002 and has not been continuously inhabited by you, an obligation is likely. An energy advisor or a look at the energy certificate will provide final clarity.
What is the difference between renovation, refurbishment, and modernisation?
A renovation is a cosmetic enhancement (e.g., painting). A refurbishment rectifies defects and restores the original state (e.g., basement sealing). A modernisation improves the standard and reduces energy consumption (e.g., new windows, insulation). The boundaries are often fluid.
Is it worthwhile to hire an expert for an accurate cost estimate?
Yes, absolutely. The costs for a construction survey (approximately €400-950) are low compared to potential, undiscovered renovation costs, which can quickly reach five-figure sums. A survey provides a reliable basis for negotiation and planning.
What happens if I miss the two-year renovation deadline?
If you do not comply with the statutory renovation obligations within the two-year period, the relevant building authority may impose a fine of up to €50,000. It is therefore advisable to create a renovation plan early on.
How can Auctoa help me assess renovation costs?
Auctoa offers with ImmoGPT an AI-driven initial assessment that helps you understand the current market value and potential value post-renovation. This allows you to evaluate the profitability of planned investments based on data and make an informed decision.
