Inheriting a house is more than just a gain in wealth – it is a responsibility that requires strategic decisions. With emotional value, financial opportunities, and tax obligations, many heirs find themselves facing a complex situation.
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The topic briefly and concisely
Selling a house as an inheritance provides quick liquidity, but can be significantly reduced by inheritance and speculation taxes.
In an inheritance community, a unanimous decision is required for a sale; disagreement often leads to value losses through a forced sale by partition.
The ten-year speculation period is taken over by the testator and is a decisive factor for the tax burden.
This guide highlights the crucial advantages and disadvantages of selling a house as an heir. We provide you with a data-driven foundation to avoid financial pitfalls, resolve conflicts within the community of heirs, and maximise the value of your inheritance. Make an informed decision based on facts rather than gut feelings.
Key Points Briefly: Your Strategic Overview
The sale of an inherited property is a decision with far-reaching financial and personal implications. Here are the central aspects you need to consider:
Financial Liquidity: A sale immediately provides financial resources and eliminates ongoing costs, which can amount to 1-2% of the property value annually.
Tax Burden: Inheritance and capital gains taxes can significantly reduce your profit. Personal allowances range from €20,000 for non-relatives to €500,000 for spouses.
Community of Heirs: Without a unanimous decision by all co-heirs, a sale is not possible. Disagreements often lead to value losses of up to 30% due to forced auctions.
Value Development: Properties are considered stable investments. A sale precludes future value increases or rental income.
An accurate, neutral appraisal is the foundation for each of these considerations.
Advantage 1: Quick liquidity and cost avoidance
The most obvious advantage of selling an inherited house is the quick access to capital. Instead of having an illiquid asset, you and your co-heirs receive a specific amount of money that can be easily divided. This significantly speeds up the settlement of an inheritance community. Additionally, you immediately end all ongoing costs. A property incurs expenses for property tax, insurance, and maintenance even when unoccupied, which can quickly add up to several thousand euros per year. High renovation costs, particularly for older properties, can diminish the value of the inheritance. A sale transforms these liabilities into a realised profit. With a clear sales strategy based on a solid property valuation, you ensure financial clarity. This financial freedom is a strong argument that convinces many heirs.
Disadvantage 1: Tax pitfalls can reduce the revenue
The sale of an inherited property is rarely completely tax-free. Two types of taxes are relevant for you as an heir: inheritance tax and capital gains tax. Inheritance tax is payable if the value of the property exceeds your personal allowance. For children, this is €400,000, for grandchildren €200,000, and for unrelated heirs only €20,000. Everything above that is taxed. The second hurdle is the capital gains tax, which applies if less than ten years have passed between the purchase by the deceased and the sale by you. The tax rate is based on your personal income tax rate and can significantly reduce the profit. However, there are exceptions, for example, if the property was used personally in the year of sale and the two preceding years. Therefore, a careful examination of the applicable deadlines is essential to avoid an expensive surprise.
Advantage 2: Conflict Resolution in the Inheritance Community
If an inheritance is made up of several people, an estate community automatically arises. This carries significant potential for conflict as all decisions must be made unanimously. A co-heir alone can block the sale, even if they only hold a small share of 5%. Diverging interests—one wants to rent, another wants to move in themselves, and the third wants to sell—often lead to years of stasis and loss of value. A sale is often the cleanest and fairest solution here. The proceeds from the sale are money and can, unlike a house, be divided exactly according to the inheritance quotas. This prevents potential long-term disputes and preserves family harmony. The process creates clear facts and ends the often emotionally charged discussion about the future of the property. Find out how to sell a house from an estate community to ensure the process runs smoothly. In doing so, the sale becomes a tool that dissolves the community instead of dividing it.
Drawback 2: The risk of a partition auction
If an inheritance community cannot agree on a voluntary sale, the last resort is the division auction. Any co-heir can apply for this process at the responsible local court without the consent of the others. Although this may sound like a solution, it is usually the worst of all options. In such a forced auction, properties are often sold well below their market value. Depreciations of 20% to 30% compared to a regular sale are not uncommon. Additionally, significant court and procedural costs further reduce the proceeds. The emotional and familial damage caused by such a forced process is also considerable. Therefore, a division auction should be avoided at all costs. It destroys wealth and often leaves only losers. An early, neutral assessment can help show all parties the realistic value and prevent escalation. This underscores the necessity of finding a common basis before legal steps become inevitable.
Benefit 3: Renouncing future appreciation and rental income
An immediate sale also means foregoing future profits. The German real estate market has experienced significant value appreciation over the past ten years. Depending on the location and condition of the property, it may be strategically wise to hold onto the asset and bet on further positive development. Alternatively, renting offers an opportunity to generate ongoing income. This can help cover costs and contribute to long-term wealth building. However, renting is associated with management effort and legal obligations. Furthermore, rented properties often fetch a lower price upon eventual sale. The decision largely depends on your personal risk tolerance and financial goals. Weigh up whether the quick proceeds outweigh potential future profits. A comparison calculator for selling or renting can provide an initial guide here.
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An inherited property is rarely just a bundle of bricks and mortar; often it's the family home, full of memories. This emotional value cannot be quantified in euros and makes the decision to sell particularly difficult. For many heirs, selling feels like a final farewell to a part of the family history. Statistics show that around 72% of heirs initially wish to keep inherited properties, often for emotional reasons. However, this emotional attachment can block rational decisions and lead to financial disadvantages if necessary steps are postponed. It is important to be aware of this emotional aspect and to include it in the decision-making process without being paralysed by it. Sometimes it is helpful to clearly weigh up the options to sell or move in yourself to align personal desires and financial realities. An objective view from outside can help to find the right balance.
The data-driven assessment as the foundation of your decision
What costs are incurred when selling an inherited house?
In addition to possible taxes, costs arise for obtaining an energy certificate (around €300-500), notary fees (approximately 1.5% of the purchase price), potentially estate agent fees (which vary by region, often 3.57% including VAT for the seller), and costs for land registry correction. You may also incur expenses for renovations or clearing out the household.
What is the deadline to accept or decline an inheritance?
The period to decline an inheritance is generally six weeks from the time you learn of it. If you miss this deadline, the inheritance is deemed automatically accepted—including all rights and obligations.
Do I need to inform the tax office about the inheritance?
Yes, you are legally required to inform the relevant tax office within three months after becoming aware of the inheritance. This applies even if the value of the inheritance is below personal allowances.
What is the difference between market value and assessed value?
The market value (or current price) is the price that can be achieved in the market today. The assessed value is an outdated fiscal valuation basis, often significantly lower than the actual market value, and is only used in certain situations for inheritance and property tax purposes.
Can I sell my share of the inherited property?
Yes, as a co-heir, you can sell your entire share of the inheritance to a third party or another co-heir. However, you cannot sell just your portion of the property alone. The sale of the inheritance share requires notarial authentication.
What is early repayment compensation in the case of inheritance?
If the inherited property is still encumbered with a loan and you repay it early using the sale proceeds, the bank may demand early repayment compensation. This is a fee for the bank’s lost interest income.
Additional useful links
The Federal Ministry of Finance provides comprehensive information on inheritance and gift tax.
The Federal Ministry of Finance explains the application of regulations for the valuation of real estate within the framework of inheritance and gift tax.
The Federal Statistical Office (Destatis) provides data on construction costs and real estate price indices.
A press release from the Federal Statistical Office (Destatis) informs about current real estate prices.
Haufe offers a specialized article on the valuation of real estate for inheritance tax.
On notar.de, you will find a fee calculator for notarial costs.
The Deutsche Bundesbank publishes statistics on real estate and construction service prices.
FAQ
What costs are involved when selling an inherited house?
In addition to possible taxes, costs for creating an energy performance certificate (approximately €300-500), notary fees (around 1.5% of the purchase price), potentially estate agent fees (varying by region, often 3.57% including VAT for the seller), and expenses for land registry corrections apply. Additional costs may include expenses for renovations or clearing out a household.
What is the deadline to accept or reject an inheritance?
The period for disclaiming an inheritance is usually six weeks from the time you learn about the inheritance. If you miss this deadline, the inheritance is automatically considered accepted—including all rights and obligations.
Do I need to inform the tax office about the inheritance?
Yes, you are legally required to inform the relevant tax office within three months of becoming aware of the inheritance. This applies even if the value of the inheritance is below the personal allowances.
What is the difference between market value and standard value?
The market value (or fair market value) is the price that can currently be achieved in a sale on the market. The standard value is an outdated tax assessment base that is often far below the actual market value and is only used for inheritance and land taxes in certain cases.
Can I sell my share of the inheritance in the property?
Yes, as a co-heir, you can sell your entire inheritance share to a third party or another co-heir. However, you cannot sell just your share of the property alone. The sale of the inheritance share requires notarisation.
What is early repayment compensation in the event of inheritance?
If the inherited property is still burdened with a loan and you pay it off early with the proceeds from the sale, the bank may charge an early repayment fee. This is a charge for the bank's lost interest income.
