Selling a property to a brother or sister may seem straightforward, but it involves tax and legal hurdles. Ignorance can quickly lead to additional payments of several thousand euros. This guide shows you how to make the process fair and legally secure.
Chat with ImmoGPT for free now.
With access to Google, BORIS, and Deep Research.
The topic briefly and concisely
When selling to siblings, property transfer tax always applies (3.5% - 6.5%) as they are considered relatives from a collateral line.
A sale significantly below market value can be considered a mixed gift, with siblings only having an exemption of €20,000.
In an inheritance community, co-heirs have a statutory pre-emption right of two months if a share is sold to an external party.
Are you looking to sell a property to your sister or brother? Such a transaction within the family is often emotional and complex. Many property owners underestimate the tax implications or the importance of a fair purchase price, which can lead to unexpected costs and family tensions. This article explains step by step what you need to consider when selling to siblings – from land transfer tax to finding the right price, and even the specifics of hereditary communities. This way, you ensure family harmony and avoid costly mistakes.
In brief: Your checklist for selling
Before delving into the details of selling property to siblings, here is a quick overview of the key points you need to consider.
Property Transfer Tax: Unlike sales to direct relatives (parents, children), the full property transfer tax generally applies to sales to siblings, ranging from 3.5% to 6.5% of the purchase price depending on the federal state.
Gift Tax: If you sell the property significantly below market value, the tax office may assume a mixed gift. The tax-free allowance for the gifted portion is only 20,000 euros between siblings.
Market Value: A neutral determination of the market value is crucial to avoid accusations of hidden gifts and to establish a fair basis for all parties involved.
Notary Requirement: Every property sale in Germany, even within the family, requires a notarised contract of sale. The costs for this are approximately 1.5% to 2.0% of the purchase price.
Community of Heirs: If you are part of a community of heirs, your co-heirs have a legal pre-emption right of two months if you wish to sell your share to a third party.
These key points form the foundation for a smooth transaction and help to avoid the most common cost pitfalls.
Tax Trap No. 1: Don't Underestimate the Property Transfer Tax
A common misconception is that no real estate transfer tax is incurred in family property transactions. This is only partially true. While sales in a direct line, such as to children or parents, are tax-exempt, siblings fall into the so-called collateral line. This means: A full real estate transfer tax is due when selling a property to a brother or sister. The rate varies depending on the federal state and ranges from 3.5% in Bavaria to as much as 6.5% in North Rhine-Westphalia or Brandenburg. For a purchase price of 400,000 euros, the tax burden alone can amount to up to 26,000 euros. Attempts to circumvent this tax through a 'chain transfer' via parents are generally considered an abusive arrangement (§ 42 AO) by the tax office and are not recognised. An exception can exist within the context of an inheritance settlement, where assets are transferred to equalise heirs. How you legally protect yourself when selling a house is therefore crucial.
Pricing: Why Selling Below Value Can Be Costly
Of course, you want to offer your sibling a favourable price. Selling below the actual market value is generally permissible, but caution is advised. If the agreed selling price deviates significantly from the market value determined by the tax authorities, the transaction is considered a 'mixed gift'. The difference between the selling price and market value is treated as a gift. For siblings, there is only a personal allowance of 20,000 euros every ten years. If the value of the gift exceeds this, gift tax rates between 15% and 43% apply. An example: A property with a market value of 350,000 euros is sold for 250,000 euros. The difference of 100,000 euros constitutes a gift. After deducting the allowance of 20,000 euros, the remaining 80,000 euros must be taxed. This can lead to an unexpected tax bill of over 20,000 euros. Careful planning for gift tax is therefore essential.
Objective market value: The basis for a fair deal
How do you avoid the trap of mixed gifting? The solution lies in an objective and verifiable property valuation. The tax office uses standardized methods like the comparison, income, or cost approach for valuation. However, these general appraisals can deviate from the actual market conditions and often lead to a higher value. To be on the safe side, an independent market value appraisal is recommended. It not only provides a realistic price basis for your negotiations but also serves as reliable evidence for the tax office. Such an appraisal can save you from six-figure back payments. Unsure of your property's value? With Auctoa's free ImmoGPT chat, you receive an initial data-driven assessment in just 2 minutes. For a detailed analysis that stands up to the tax office, a professional valuation is the right choice. This is particularly relevant when you sell a house to close relatives.
Special Case of Joint Heirship: The Right of First Refusal for Co-heirs
If the property is part of an inheritance you share with siblings or relatives, the situation becomes more complex. In an inheritance community, no individual heir can decide to sell the entire property; the approval of all heirs is needed. However, if you wish to sell just your own inherited share to a sibling who is also part of the inheritance community, this is usually unproblematic. It's different if you want to sell your share to an external party. In this case, the remaining co-heirs have a legal right of first refusal according to § 2034 BGB. This means:
You must inform the co-heirs about the notarised purchase contract with the third party.
The co-heirs then have a period of two months to enter into the contract under exactly the same conditions.
If a co-heir exercises their right of first refusal, the sale is concluded with them, not with the original buyer.
This right is intended to prevent outsiders from entering the inheritance community. Therefore, selling from an inheritance community requires particularly careful coordination.
Avoid speculation tax: Know the deadlines and exemptions
Another tax aspect for the seller is the speculation tax. This is incurred if the period between the purchase and sale of a property is less than ten years (§ 23 EStG). The profit from the sale must then be taxed at the personal income tax rate. However, there is an important exception: the tax does not apply if you have used the property solely for residential purposes in the year of sale and the two preceding years. In the case of an inherited property, the period of ownership of the deceased is credited. If the deceased acquired the property more than 10 years ago or lived in it continuously, no speculation tax is payable by the heirs. Check these deadlines carefully to avoid an unnecessary tax burden of up to 45% on the sales profit. The correct calculation of inheritance tax is an important first step here.
verkauf-an-geschwister-was-ist-zu-beachten
Selling a property to siblings is an opportunity to keep valuable assets within the family. The key to success lies in transparency and professional preparation. A neutral valuation protects against costly tax traps and prevents conflicts. Clarify tax obligations like land transfer and gift tax in advance and record all agreements in a notarised contract. This ensures that the sale is beneficial for both parties and doesn't strain the family relationship. A well-planned sale is the best investment in family harmony.
Additional useful links
Bundesfinanzministerium offers a comprehensive overview of inheritance and gift tax.
Bundesfinanzministerium provides introductory tax information on inheritance and gift tax.
The Federal Statistical Office (Destatis) offers a publication on inheritance and gift tax for download.
Wikipedia explains inheritance tax in Germany.
Wikipedia provides information on the Inheritance and Gift Tax Act.
The Wealth Centre gives advice on how siblings can agree when inheriting the family home.
The Wealth Centre provides information on inheritance tax for real estate.
Wüstenrot offers a guide on inheritance tax for real estate.
The German Bundestag provides archived information on the topic of inheritance tax.
The Economic Service examines the development of revenues from inheritance and gift tax.
FAQ
What costs are incurred when selling to siblings?
The main costs are usually borne by the buyer. These include the property transfer tax (3.5% - 6.5% of the purchase price) and the notary and land registry fees (approx. 1.5% - 2.0%). The seller may incur costs for the removal of encumbrances from the land registry.
Does the sale to siblings need to be notarised?
Yes, every property sale in Germany must be notarised to be legally binding. This applies without exception, even for sales within the family.
How is the market value of a property determined for the tax office?
The tax office uses standardised methods such as the comparative value, capitalised earnings value or real value method in accordance with the Valuation Act (BewG). Since these values are standardised, an independent market value appraisal can demonstrate a more accurate and often more advantageous value.
What happens if we cannot agree on a sale within the community of heirs?
If no agreement is reached, any co-heir can apply for what is known as a partition auction. In this process, the property is publicly auctioned, and the proceeds are divided among the heirs. However, this often results in financial losses compared to a private sale.
Can I avoid the real estate transfer tax by first selling the property to my parents and then having them sell it to my sibling?
Such "chain donations" or sales are strongly discouraged. The tax office generally recognizes such arrangements as an abuse of legal options (§ 42 AO) to avoid taxes and subsequently demands real estate transfer tax.
When do I have to pay capital gains tax when selling to siblings?
Capital gains tax applies if you sell the property within ten years of purchase. Exceptions apply if you have lived in the property yourself during the year of sale and the two preceding years, or if the deceased acquired it more than 10 years ago.
