Have you inherited a property and are considering a quick sale? Many heirs fear high taxes when selling an inherited property that is less than 10 years old, but this doesn't have to be the case. Understand the crucial deadlines and exceptions to save thousands of euros in taxes.
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The topic briefly and concisely
The 10-year speculation period begins on the date of purchase by the decedent, not with the inheritance event.
Personal use by the testator or heir in the year of sale and the two preceding years abolishes the speculative tax.
The speculative gain is taxed at the personal income tax rate (up to 45%), not at a flat rate.
Selling an inherited property is a complex task, often associated with emotional and financial challenges. Selling an inherited property within 10 years of the original acquisition by the deceased raises questions about the speculative tax. Lack of knowledge about the applicable deadlines and exemptions can lead to a significant tax burden of up to 45% on the capital gain. This article provides you with a clear, data-driven guide on how to correctly calculate the speculation period, evaluate the benefits of own-use, and strategically plan your sale. This way, you can make informed decisions, minimize your tax liability, and secure the maximum returns from your inheritance.
The speculation period: The crucial factor for a tax-free sale
If you have inherited a property, the so-called speculation period according to § 23 EStG is the first important key figure you need to check. This period is generally ten years. However, crucially: The period does not start with the inheritance event, but with the date when the deceased originally acquired the property. This continuity of the period is the biggest lever to avoid the speculation tax.
An example illustrates this: If the deceased acquired the property in 2013 and you inherit it in 2024, the ten-year period has already expired. Thus, the sale is completely tax-free for you, which can increase the profit by up to 45%. Conversely, if the deceased acquired it, say, five years ago, it means you "inherit" the remaining five years of the period. A close examination of the speculation period is therefore essential before any further steps are planned.
Exceptions to the 10-year rule: The advantage of personal use
Even if the ten-year period has not yet expired, the sale can remain tax-free. The law provides an important exception for owner-occupied properties. There are two primary scenarios that allow for a tax exemption:
Use by the deceased: If the deceased lived exclusively in the property in the year of inheritance and in the two preceding calendar years, the capital gains tax does not apply to you as the heir.
Use by the heir: Alternatively, you as the heir can avoid tax liability by using the property yourself in the year of sale and the two years prior.
A short example to illustrate the use by heirs: Moving in December 2023, continuous use in 2024, and selling in January 2025 is sufficient to meet the requirement. Although you have only effectively lived there for 14 months, this covers three calendar years. This regulation provides significant flexibility for heirs who need to sell quickly. A tax-free house sale is therefore often possible even within the 10-year period.
Calculation of the speculation tax: How to determine your potential burden
If the sale falls within the speculation period and no exceptions apply, the profit must be taxed. The basis for calculation is not the sale price, but the capital gain. The formula for this is simple but requires precise figures:
Sale price: The price certified by a notary.
Less acquisition costs: This is the original purchase price paid by the decedent, plus any subsequent production costs.
Less sales and incidental costs: These include brokerage fees (often 3-7% of the sale price), notary fees (about 1.5-2%), and costs for modernisations within the last three years before the sale.
The resulting profit is taxed at your personal income tax rate, not a flat rate. If your top tax rate is 42%, the speculation gain is taxed accordingly. Accurate valuation is crucial to calculate the profit correctly. With our inheritance tax calculator, you can explore initial scenarios.
Inheritance tax and speculation tax: Understanding two separate procedures
A common misconception is the conflation of inheritance tax and capital gains tax. They are two completely independent types of tax. The inheritance tax applies to the value of the estate you receive and is reduced by personal allowances. For children, this allowance is 400,000 euros, and for spouses, it is 500,000 euros. If the property value is below this, you do not pay inheritance tax.
The capital gains tax, however, refers exclusively to the profit from a resale within the stipulated period. Even if no inheritance tax is due, the capital gains tax can still be due in full. An accurate, data-based valuation is fundamental for both types of tax. You need a reliable market value for the tax office. At Auctoa, you can obtain such an AI-supported analysis or directly address your questions with our ImmoGPT.
Conclusion: Maximising sales revenue with a data-driven strategy
Selling an inherited property within 10 years requires a careful analysis of a few crucial factors. First, check the original purchase date to determine the remaining speculative period. Second, analyse the usage history to benefit from the owner-occupation exemption, which can lead to a tax saving of over 40%. Third, calculate all costs precisely to avoid overstating the taxable profit.
A well-informed decision is always based on hard facts, not a gut feeling. The complexity of the tax regulations makes a professional and impartial assessment essential. Such a data-driven analysis protects you from unexpected tax demands and ensures that you realise the true value of your inheritance. Get in touch now for a free evaluation of your situation. An accurate valuation is the first step to a successful sale.
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Additional useful links
Sparkasse explains the capital gains tax on the sale of real estate.
Rose & Partner offers detailed information on the capital gains tax for the sale of properties and houses.
Handelsblatt provides information on what you should know about the capital gains tax before selling a property.
steuern.de supplies information on the capital gains tax on real estate.
Gesetze im Internet provides the official legal text of the Inheritance and Gift Tax Act.
Bundesfinanzministerium delivers official information on inheritance and gift tax.
Stiftung Warentest explains how tax offices determine the market value of properties.
steuertipps.de informs about changes in property valuation for inheritance tax from 2023.
Destatis offers information and data on the construction price index and property price index.
FAQ
What costs can I deduct from capital gains?
You can deduct the original acquisition costs of the deceased, notary and brokerage fees for the current sale, as well as value-enhancing modernisation costs from the past three years from the selling price to reduce the taxable gain.
What happens if I inherit only a share of a property (community of heirs)?
In an inheritance community, the same tax rules apply, but all decisions, including sales, must be made jointly. The speculative gain is distributed among the co-heirs and taxed individually.
Does the self-use exemption also apply to a second home or holiday home?
No, the tax exemption for personal use only applies to properties that are used as a main residence and centre of life. Occasional use of a holiday home is generally not sufficient.
What is the three-object limit?
If, as a private individual, you sell more than three properties within five years, the tax office may assume it is a commercial property trade. In this case, not only income tax but also trade tax will be applied.
Is there capital gains tax if I sell the inherited house at a loss?
No, the speculation tax is only levied on a capital gain. If the sale price, after deducting all costs, is below the original purchase price, there is no gain and therefore no tax liability.
How do I prove personal use to the tax office?
The best proof of personal use is the registration confirmation from the residents' registration office. Additionally, electricity and gas bills or correspondence to this address can also serve as evidence.
