Inheritance Manager
Real Estate Legal Information
Speculation period for the sale of an inherited house
Have you inherited a property and are wondering if selling it will incur high taxes? The speculation period is one of the biggest financial hurdles, but it can often be legally avoided. This guide shows you how to correctly calculate the periods and use the exemptions to your advantage.
With access to Google, BORIS, and Deep Research.
The 10-year speculation period begins with the purchase by the testator, not with the inheritance event, which often allows for a tax-free sale.
The tax obligation ceases when the property is used for personal purposes in the year of sale and the two preceding calendar years – this also applies to use by the decedent.
The capital gain is taxed at the personal income tax rate; deductible expenses such as brokerage fees or renovations can significantly reduce the tax burden.
Selling an inherited house is an emotional and complex task for many heirs. In the midst of this phase, a crucial financial question arises: Is there any speculative tax when selling? The answer depends on the so-called speculation period for the sale of an inherited house, a 10-year rule that often causes confusion. The good news is that the key date of the inheritance event is not decisive. Instead, the holding period of the deceased is credited, which in over 70% of cases leads to a tax-free sale. This article explains the exact rules, the critical exceptions, and how an accurate determination of the market value can help you avoid costly mistakes and minimise your tax burden.
Testator's Deadline Counts: The 10-year speculation period starts from the date of purchase by the deceased, not from the time of inheritance. If this period has expired, the sale is tax-free for you.
Owner Occupation as an Exception: If the deceased or you as the heir lived in the property in the year of sale and the two preceding calendar years, the speculation tax is waived, even within the 10-year period.
Profit under €600 is tax-free: If the profit from the sale (sale price minus purchase and selling costs) is below the exemption limit of 600 euros per year, no tax is due.
Inheritance Tax is Separate: Independently of the speculation tax, inheritance tax may be applicable. Personal allowances apply, ranging between €20,000 and €500,000, depending on the degree of kinship.
If you sell a private property shortly after purchasing it at a profit, the state wants a share of it. This is regulated by the speculation tax, which is enshrined in § 23 of the Income Tax Act (EStG). The legislator aims to curb rapid, purely profit-driven real estate transactions. The key figure here is the holding period of 10 years. When you inherit, you legally succeed the decedent. This means for the speculation period when selling an inherited house: you take over the period that is already running. So, if the deceased bought the house 11 years ago, you can sell it immediately tax-free. The period does not start anew with the inheritance, which is a significant advantage for heirs. A thorough examination of the original purchase contracts is therefore the first step. Inform yourself about the most important steps in selling real estate to get everything right from the start. This continuity of the period is the key to tax optimisation.
But what if the 10-year period hasn't expired yet? Here, the law offers a valuable exception: personal use. If you or the previous owner have lived in the property exclusively yourself, the speculative tax is waived. Two conditions must be met for this:
The property was used continuously for your own residential purposes during the year of sale.
The property was also continuously lived in during the two preceding calendar years.
This regulation is very flexible. Living there for just a full calendar year plus one day each in the preceding and following year is sufficient. An example: The testator lived in the house until his death in January 2024. You move in immediately and sell in December 2025. Since the property was used personally in 2023 (by the testator), 2024, and 2025 (by you), the sale is tax-free. This regulation also applies if you have transferred the house free of charge to your own child. Correct handling of this exception can save you a tax burden of up to 45% on the profit. However, you should carefully weigh the advantages and disadvantages of a sale.
Accurate calculation is crucial to avoid unpleasant surprises. The notarized contract dates are always decisive for the beginning and end of the 10-year period. The day the purchase contract is concluded by the deceased is the starting point. The day the sales contract is concluded by you as the heir is the endpoint. If the sale falls within this period, the profit will be taxed. The taxable profit is calculated as follows:
Sale price - (Original acquisition costs + modernization costs + incidental sales costs) = Taxable profit
Deductible costs include not only the original purchase price but also the notary and land registry fees from then, brokerage costs for the current sale, as well as value-enhancing renovations. The resulting profit is not taxed at a fixed rate but with your personal income tax rate, which can be up to 45% depending on income. Precise valuation is essential here. Use our inheritance tax calculator to get an initial assessment. In doing so, you create a solid foundation for your sales decision.
If multiple people inherit together, an inheritance community automatically arises. This group can only unanimously decide on the fate of the property. This often leads to complex situations, especially concerning the speculation period for selling an inherited house. If the community decides to sell to a third party, the aforementioned rules apply to the entire property. The profit is distributed among the co-heirs according to their inheritance shares and taxed individually. It becomes more complicated if one heir pays out the others to take over the property alone. The purchase of inheritance shares by a co-heir is considered an acquisition transaction. For the acquired share, a new 10-year speculation period begins. If this heir then sells the house after, say, 3 years, the profit from their original share is tax-free (provided the old period had expired), while the profit from the purchased shares is fully taxable. A clear strategy is essential here. Clarify early on what needs to be considered with an inherited property.
You are not at the mercy of capital gains tax. With the right strategy, you can often reduce the tax burden to zero. The most effective method is to wait until the 10-year period, which began with the purchase by the testator, has expired. If this is not an option, consider the exception of personal use. Sometimes it can be worthwhile to live there yourself for a little over two calendar years to save tens of thousands of euros in taxes. Another possibility is to reduce the profit. Gather all receipts for costs that have increased the value of the property or are related to the sale. These include:
Costs for appraisals and energy performance certificates
Broker commissions and notary fees
Costs for advertisements and marketing
Subsequent acquisition costs (e.g., extension, attic conversion)
Every euro of deductible costs directly reduces your taxable profit. Accurate documentation is worth real money here. If you are uncertain, an impartial evaluation by Auctoa or a conversation with our ImmoGPT chat can provide initial clarity on which costs are deductible. This ensures that you don't overlook any tax-saving opportunities.
The speculation period for the sale of an inherited house is one of the most important financial hurdles that heirs need to be aware of. In most cases, however, a tax-free sale is possible because the holding period of the deceased is taken into account, and the 10-year period has often already elapsed. If this is not the case, the owner-occupancy exception is your strongest tool to avoid tax liability. A careful review of the deadlines and accurate calculation of the profit after deducting all costs are essential. A well-founded, data-driven property valuation from Auctoa provides you with the necessary security for your decision. Do not act hastily, but use your knowledge for an optimal financial outcome.
Gesetze im Internet provides the full legal text of § 23 of the Income Tax Act (EStG), which regulates private capital gains.
Federal Ministry of Finance offers comprehensive information about inheritance and gift tax in Germany.
Financial Administration NRW explains the notification requirements for inheritances and gifts specifically for North Rhine-Westphalia.
Federal Statistical Office (Destatis) provides up-to-date data and information on construction prices and the property price index.
Federal Statistical Office (Destatis) offers detailed tables on house prices and building land prices in Germany.
Federal Statistical Office (Destatis) publishes press releases containing relevant statistics and analyses.
Federal Ministry of Finance (EStH) includes the Income Tax Handbook (EStH) with detailed explanations of § 23 EStG and private capital gains.
Do I need to consider the speculation period even if selling at a loss?
Yes, the period always applies. A loss from the sale within the speculation period can, however, be claimed for tax purposes. You can offset it against profits from other private sales of assets in the same year or carry it forward to other years.
What if the inherited house was only partially used for personal purposes (e.g., with a home office)?
If part of the property, such as a home office, is deducted as a business expense for tax purposes, this part is not considered as used for personal residential purposes. In the event of a sale within the 10-year period, the profit attributable to this part would be partially taxable.
Does the 10-year period also apply to an inherited plot of land?
Yes, the 10-year speculation period applies to undeveloped plots of land as well as to houses and apartments. Since personal use is not possible with a plot of land, the period cannot be shortened here.
What is the three-object limit in relation to inheritances?
If you sell more than three properties within five years, the tax office assumes a commercial property trade. In this case, not only speculation tax is due, but also trade tax. Inherited properties count towards this.
Does the period reset if I make renovations as an heir?
No, modernization or renovation work does not trigger a new speculation period. However, you can deduct the costs from the sales profit and thus reduce your tax liability, as long as they are considered acquisition-related production costs.
How can Auctoa assist in valuation and tax minimisation?
Auctoa offers a quick, AI-supported property evaluation that provides you with an impartial market value. This value forms the basis for calculating inheritance tax and helps you realistically assess the potential sales profit. Our ImmoGPT chat can also answer initial questions regarding your specific situation.
