Are you faced with the task of selling an inherited property, and the potential buyer is coming from abroad? This process presents unique challenges, ranging from legal intricacies to tax pitfalls. Our guide will show you how to successfully and securely structure the sale to international buyers.
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The topic briefly and concisely
Foreigners from both EU and non-EU countries are generally allowed to purchase property in Germany without special permission, although this does not establish a right of residence.
For sellers, inheritance tax and speculative tax are relevant; for the latter, the purchase date by the testator is crucial for the 10-year period.
The Money Laundering Act (GwG) obliges notaries to rigorously verify identity and source of funds, which can lead to delays for foreign buyers.
Selling an inherited property is both an emotional and financial challenge. If the buyer is from abroad, the complexity increases significantly. Are you unsure about the legal framework, how tax obligations are managed, or how to securely process the payment? This article provides you with clear guidance. We navigate you through the crucial phases of selling to international buyers and demonstrate how an objective property valuation serves as a digital compass to achieve the best possible price and minimise risks.
Legal foundations for selling to foreign buyers
In principle, there is nothing to prevent you from selling your inherited property to a foreign buyer. In Germany, there are hardly any restrictions on property acquisition by foreigners, regardless of their nationality or place of residence. This applies equally to private individuals and companies from EU and non-EU countries, based on the European freedom of capital movement. A residence permit in Germany is not required for acquisition.
However, it is important to know that acquiring property does not automatically grant a foreign buyer a right of residence in Germany. A rare exception to the general freedom of acquisition exists for properties located in areas relevant to security; here, a permit under the Foreign Trade Regulation (AWV) may be required. To avoid legal pitfalls, it is advisable to clarify the marital status of the buyer, as foreign matrimonial property law (e.g., community of property in Italy) may require both spouses to be listed as buyers. Clarifying these legal details forms the basis for tax considerations.
Tax obligations when selling an inherited property
When selling an inherited property, two types of taxes are crucial for you as the seller: inheritance tax and speculation tax. Inheritance tax is incurred as soon as you take on the inheritance, with the amount depending on your degree of kinship to the deceased and the associated exemptions. A professional valuation of the market value at the time of inheritance can correct an overestimation by the tax office and reduce your tax burden by up to 15%.
The speculation tax is payable on the capital gain if less than ten years have passed between the deceased's purchase and your sale. The key date here is the original purchase date by the deceased, not the date of inheritance. An exception exists if the property was used exclusively for residential purposes in the year of sale and the two preceding years. A detailed checklist for the sale helps you keep track of all deadlines. Accurate calculation of these taxes is a central step before the final pricing.
Anti-Money Laundering Act (GwG): Due Diligence Obligations for International Buyers
The real estate sector is considered vulnerable to money laundering, which is why lawmakers prescribe strict regulations. Notaries and real estate agents are legally obliged to verify the identity of the buyer and ensure the plausibility of the origin of the financial resources. This is particularly important for buyers from abroad. They must prepare for a thorough examination of the beneficial owner. For transactions with foreign companies, an entry in the German transparency register is also required.
Without this evidence, the notary cannot notarise the purchase contract, which can lead to significant delays of several weeks. The following points are particularly relevant:
Identity verification: The buyer must identify themselves with a valid ID document.
Origin of funds: It must be traceable where the money for the purchase price comes from.
Transparency register: Foreign legal entities must report their beneficial owners.
Reporting obligation: In the case of suspicious transactions, there is a reporting obligation to the Financial Intelligence Unit (FIU).
These measures not only protect the integrity of the financial system but also legally protect you as a seller. Careful preparation of these aspects is therefore essential for the next step: secure payment processing.
Designing secure payment processing
The safest method for handling the purchase price is an escrow account, managed by the notary. The buyer pays the purchase price into this account, and the notary only transfers the money to you once all contractual conditions are met, notably the registration of the priority notice of conveyance in the land register. The costs for an escrow account are based on the purchase price and, for example, for an amount from 10,001 euros, there is a rate of 0.25%.
However, the use of an escrow account is now only provided for when there is a "legitimate interest in security." Such an interest typically exists in the following cases:
The purchase price is financed by several loans from different banks.
The property is to be handed over to the buyer before the full legal title is transferred in the land register.
The buyer is abroad and cannot directly coordinate the payments.
It is a sale from a foreclosure auction.
The decision on the necessity is made by the notary. A transparent arrangement of the payment modalities is the last step before the successful completion of the sale.
Auctoa Rating: Data-driven security in an international context
Especially when selling to foreign buyers who may not be as familiar with the local market, an objective and comprehensible selling price is crucial. An AI-driven international property valuation from Auctoa provides you with a neutral, data-driven basis that is free from conflicts of interest. This strengthens your negotiating position and builds trust with the buyer. A well-founded report protects you from price dumping and serves as a reliable basis for tax calculations, such as when determining inheritance tax.
An accurate valuation can reduce your tax burden by over 10% and speed up the sales process by weeks. Do you have initial questions about your specific case? Our ImmoGPT chat is available around the clock for a free initial assessment, providing you with data-driven answers swiftly and effortlessly. This objective foundation is key to confidently managing the sales process.
Conclusion: Strategic Path to a Successful Sale
The sale of an inherited property to a foreign buyer is a multi-stage process that requires care. Although the legal framework in Germany is liberal, tax obligations and the regulations of the Money Laundering Act demand thorough scrutiny. A professional property valuation forms the foundation for secure price negotiations and accurate tax calculations. With a clear strategy and the right preparation, you can turn a complex challenge into a successful transaction. A data-driven approach is your most reliable partner on this path.
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Additional useful links
Statistisches Bundesamt provides information on construction prices and the real estate price index.
Statistisches Bundesamt offers detailed tables on house and land prices.
Bundesministerium der Finanzen provides country-specific information on international tax law.
Deutsche Bundesbank offers an indicator system for the residential real estate market.
Bundesinstitut für Bau-, Stadt- und Raumforschung (BBSR) informs about current developments in the housing and real estate markets.
BBSR offers a detailed report on foreign buyers in the residential real estate market.
Gesetze im Internet provides the full text of the Inheritance Tax and Gift Tax Act (ErbStG).
Bundesnotarkammer publishes interpretation and application notes on the Money Laundering Act (GwG).
FAQ
Do I need a bilingual sales contract to sell to a foreigner?
The notarised purchase agreement is always recorded in German in Germany. If the foreign buyer does not sufficiently understand the German language, a certified interpreter must be present at the notarisation to translate the content. The costs for this are usually borne by the buyer.
What happens if the foreign buyer does not secure financing?
To minimise this risk, you should obtain a financing confirmation from a bank or proof of equity before the notarisation. If the contract has already been signed and the buyer cannot pay, you will need to withdraw from the contract, which involves costs and time.
Who bears the costs for the notary and land register?
In Germany, the buyer usually bears all ancillary purchase costs. These include the property transfer tax (depending on the federal state, between 3.5% and 6.5%), notary fees (approx. 1.5%), and land registry costs (approx. 0.5%).
How long does the sales process take for an international buyer?
The process may take longer than with a domestic buyer, often an additional 1-2 months. Potential delays may arise from obtaining documents from abroad, clarifying financing, and possibly registering in the transparency register.
Do I, as a seller, have to pay taxes abroad if the buyer is from there?
No. The sale of a property located in Germany is also taxed in Germany. The residency or nationality of the buyer has no impact on your tax obligation in another country.
What is the speculation period for an inherited property?
The speculation period is ten years. If you sell the property within this period for a profit, speculative tax will apply. In the case of an inheritance, the period does not start with the inheritance event, but rather from the date the decedent originally acquired the property.
