Is the tax office assessing the value of your inherited property too high? This could quickly cost you several thousand euros in inheritance tax. Learn how you can defend yourself with the right data and prove the actual, fair market value.
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The topic briefly and concisely
The tax office uses standardized valuation methods, which often result in a valuation that is 20-30% too high and consequently lead to excessive inheritance tax.
According to § 198 BewG, you have the right to demonstrate a lower property value through an appraisal or a timely sale.
A qualified appraisal takes into account value-reducing defects and can lower the tax burden by thousands of euros; the costs for this are tax-deductible.
If you inherit or receive a property as a gift, you can quickly face a high tax demand. The tax office often determines the market value for calculating the tax burden using blanket procedures, without ever having inspected the property. This standardised valuation can exceed the actual value by 20% to 30%, as individual characteristics like structural damage or renovation backlogs are not considered. For you as the owner, this means an unnecessarily high tax burden. However, you are not helpless. This article shows you how to check the value set by the tax office and use a qualified report to determine the correct, lower market value of the property for the tax office, significantly reducing your tax burden.
Understanding the standardised assessment of the tax office
The tax office uses highly standardised procedures for value assessment, which are laid out in the Valuation Act (BewG). Generally, the comparative value method, the asset value method or the income value method is used, without a surveyor inspecting your property on site. This approach does not take into account any value-reducing features such as a damp basement, outdated electrical installations, or noise disturbance. The result is an estimated value that often exceeds the real market value by 15% to 20%. Since the reform of the Valuation Act in 2023, valuations tend to be even higher. When you calculate the value for inheritance tax online, you get an initial indication of whether the assessed value is plausible. These standardised processes are the main reason why a critical review of the tax notice is essential.
Exercising Your Right: Prove the Lower Market Value
The law offers you a critical opportunity for correction: the opening clause of § 198 Valuation Act (BewG). This provision expressly allows you as the taxpayer to prove a lower fair market value than that determined by the tax office. You bear the full burden of proof; a simple assertion is not sufficient. Generally, the tax office accepts three types of evidence to reassess the market value of the property:
A qualified market value report from a certified expert.
A purchase price achieved within one year before or after the valuation date.
An appraisal from the local valuation committee.
Of these options, the expert appraisal is the most common and effective way to enforce a realistic valuation, as demonstrated by a report on an inheritance. This shifts the discussion from a blanket estimate to a fact-based analysis of your specific property.
Actively reduce your tax burden with qualified expert opinions
A qualified market value appraisal is the strongest tool against an inflated tax assessment notice. To be recognised by the tax office, it must be prepared by a certified expert, such as a person accredited according to DIN EN ISO/IEC 17024. The costs for such an appraisal start at around 2,000 euros and can be deducted from tax as an estate liability. A depreciation of just 40,000 € can already mean a saving of 6,000 € at a tax rate of 15%. Such an appraisal documents all value-relevant factors that the tax office ignores. Before you commission a full appraisal, a digital valuation like the one from Auctoa can provide a quick and cost-effective assessment to determine if the effort is worthwhile. This way, you know what your inherited house is really worth before taking any further steps. Investing in an appraisal therefore pays off multiple times in most cases.
Depreciating factors often overlooked by the tax office
The standardised procedures of the tax office cannot capture the individual condition of a property. In contrast, a qualified appraiser examines the site and documents defects that significantly reduce the value. Even a single factor, such as an upcoming roof renovation, can reduce the value by more than €20,000. The most commonly overlooked aspects include:
Structural defects and damage: Damp cellars, cracks in the masonry, outdated heating systems, or poor energy efficiency.
Legal burdens: Rights of residence registered in the land register, usufruct or easements that restrict usage.
Maintenance backlog: Necessary renovations to windows, facades or sanitary facilities due within the next 5 years.
Special burdens: A listed building status, which makes renovations more costly and restrictive.
Location disadvantages: Noise from a nearby main road, lack of infrastructure, or a negative neighbourhood transformation.
These points are crucial to correctly assessing the value of an inherited property and making an argument to the tax office.
Deadlines and correct procedures with the authority
Upon receiving the determination notice regarding the property value, you have only one month to file an objection. This deadline must be strictly adhered to, as otherwise the notice becomes legally binding. Therefore, take immediate action. Ideally, engage an expert within the first week after receiving the notice. The expert report can be submitted later, but the objection must be filed in a timely manner. An alternative is to sell the property: If you achieve a sale price within one year after the inheritance that is below the value estimated by the tax office, this sale price is considered proof of the lower market value. This is particularly relevant in the context of the speculation period for inherited houses. To avoid missing deadlines and to choose the right strategy, Auctoa's ImmoGPT Chat offers a free initial assessment in less than 60 seconds.
Conclusion: Take proactive steps to save on taxes
The blanket property valuation by the tax office often leads to excessive inheritance or gift taxes. However, the law provides you with a clear right under § 198 BewG to demonstrate a lower and thus fairer value. A qualified market value appraisal is your most effective tool, taking into account all the individual defects and burdens of your property. The costs for the appraisal are generally significantly lower than the potential tax savings, often exceeding 10,000 euros. So do not hesitate to critically review the tax office's notice and take action. A data-driven, neutral evaluation protects your wealth. Get in touch now, without obligation, to explore your options.
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Additional useful links
Stiftung Warentest explains how tax offices determine the market value of properties and which factors are relevant in this process.
The Federal Statistical Office provides comprehensive information on the construction and property price indices, which are important for valuation.
The Federal Statistical Office offers detailed tables on current house and land prices that can serve as reference values.
A press release from the Federal Statistical Office provides up-to-date data and analyses of relevant economic indicators, including property prices.
The Federal Ministry of Finance offers an official application for the allocation of purchase prices of real estate, which can be helpful for tax assessment.
Wikipedia provides a basic definition and explanation of the term "market value" (Marktwert).
FAQ
When do I need to have the market value of a property determined for the tax office?
Determining the market value is necessary whenever a property is part of an inheritance or gift. The tax office will ask you to submit a declaration of determination to calculate the inheritance or gift tax based on this.
Can I prepare the valuation report for the market value myself?
No, a self-prepared appraisal is not recognised by the tax office. Evidence of a lower market value must be provided through a qualified document, such as one from a certified expert or the local committee of experts.
What is the difference between market value and standard value?
The market value (or common value) is the sale price that can be achieved on the market. The standard value was an outdated tax assessment basis, which has been replaced by the new property tax values as part of the property tax reform. For inheritance tax, only the market value is relevant.
How long is a market value appraisal valid?
An appraisal of market value is a valuation as of a specific date, meaning it reflects the property's value on a particular date. For the tax office, the valuation date (for example, the date of the testator's death) is crucial. The appraisal should represent this date and be prepared promptly.
Does renting out a property decrease its tax value?
Yes, for properties rented out for residential purposes, the law grants a valuation discount of 10 percent. This means that, for the calculation of inheritance tax, only 90 percent of the determined market value is applied.
What happens if I miss the deadline for lodging an appeal?
If you miss the one-month objection period, the value determined by the tax office will become legally binding and can no longer be contested. You will then have to settle the potentially excessive tax demand based on it. Therefore, swift action is crucial.
