Inheriting a property immediately raises dozens of questions. This guide provides you with a clear strategy to confidently overcome all legal and financial hurdles. Safeguard your inheritance instead of being overwhelmed by obligations and deadlines.
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The topic briefly and concisely
Strictly adhere to the 6-week deadline for disclaiming an inheritance and the 2-year deadline for free land register correction.
Get a professional assessment of the market value of the property to reduce inheritance tax and establish a fair basis for decision-making.
Make use of your personal tax allowances (e.g., €400,000 for children) and check if self-use exempts you from inheritance or speculation tax.
Have you ever wondered what really awaits you after the reading of a will? An inherited property means more than just a new key in your hand; it's a complex project with strict deadlines and significant financial decisions. Many heirs lose thousands of euros because they overlook important obligations or misjudge the property's value. This article guides you through the seven most important steps you need to consider. It turns uncertainty into a clear, data-driven action plan, enabling you to make informed decisions – from updating the land registry to deciding whether to sell, rent out, or move in yourself.
Step 1: Meet deadlines and officially accept the inheritance
The occurrence of an inheritance triggers immediate, non-deferrable deadlines, the failure of which can result in legal and financial disadvantages. From the moment you become aware of the inheritance, you have exactly six weeks to renounce it if the property is over-indebted. If you miss this deadline, the inheritance is automatically deemed accepted, including all liabilities. Another critical deadline concerns the land register: you are legally obliged to correct the entry. If you submit the application to the land registry office within two years of the inheritance, the court fees are completely waived. With a property value of €500,000, you save approximately €1,200. These deadlines form the foundation for all subsequent steps.
Step 2: Organise the community of heirs and avoid conflicts
If you inherit not alone but with siblings or other relatives, you automatically form a community of heirs. In this community, no decision can be made without the consent of all co-heirs – this includes selling, renting, and even minor repairs. Serious conflicts arise in 3 out of 10 communities of heirs, often resulting in costly disputes. To remain effective, all co-heirs must work together. Clear communication and defining common goals are crucial from the outset. Determine early on what interests each co-heir is pursuing to prepare for a fair distribution of the property. The right strategy largely depends on the next step: the precise assessment of value.
Step 3: Determine the exact property value as a basis for decision-making
Every decision about the future of the property hinges on its real market value. An inaccurate estimate can cost you thousands of euros, either through too low a selling price or excessively high inheritance tax. The tax office uses standardized procedures for tax calculation that can often exceed the actual value by 15-20%. An independent valuation report provides you with a precise, data-driven basis for negotiations with co-heirs and the tax office. It is the only way to find out what your inherited house is really worth. With the Auctoa inheritance manager and our ImmoGPT, you can get an initial, AI-supported assessment in just 3 minutes, setting the course for a well-informed strategy.
Step 4: Accurately calculate inheritance tax and utilize allowances
Inheritance tax is one of the largest financial hurdles to overcome. Its amount depends on the market value of the property and your relationship to the deceased. Fortunately, the legislator grants personal allowances that often provide significant relief. Only the value exceeding your allowance is taxed. Understanding these values is crucial for your financial planning.
Here are the key allowances according to tax classes I and II:
€500,000 for spouses and registered civil partners
€400,000 for children and stepchildren
€200,000 for grandchildren
€100,000 for great-grandchildren and parents (in the case of inheritance from children)
€20,000 for siblings, nieces/nephews, and all other heirs
A precise inheritance tax calculator will help you calculate the exact burden and avoid unpleasant surprises, paving the way for the strategic main decision.
Step 5: Consider Selling, Renting, or Using Yourself – Weighing the 3 Options
With the formalities settled, the central question arises: What to do with the property? Each of the three options has significant financial and tax implications. A careful evaluation is essential to find the most profitable solution for your situation. Often, a calculator for sale or rental helps provide direction.
Here is an overview of the key aspects:
Selling: This is often the simplest solution, especially in a community of heirs. The proceeds can be clearly divided, ending all joint obligations. Be aware of capital gains tax: It applies if the deceased acquired the property less than 10 years ago and it was not used personally.
Renting: Creates a long-term income source and preserves the value for the next generation. Rental income must be taxed at your personal income tax rate. Keep in mind that maintenance costs for single-family homes can quickly reduce the yield by 2-3% per year.
Personal use: The most emotional and often the most tax-efficient option. If you move into your parent's home and live there for 10 years, inheritance tax on the property (up to 200 m² of living space) is completely waived. However, this often requires paying out co-heirs.
The decision heavily depends on your personal life plans and financial circumstances, including ongoing costs.
Step 6: Managing ongoing costs and responsibilities as a new owner
By accepting the inheritance, you immediately assume all the rights and obligations of an owner. This includes ongoing costs, which can quickly amount to 25% of the basic rent. Do not underestimate these items in your calculations. The most significant include property taxes, building insurance, waste disposal fees, and the formation of maintenance reserves. For an average single-family house, these costs can quickly amount to €400 to €600 per month. If the property has aged, you should check whether there is a need for renovation that requires further investment. A well-thought-out plan is the key to success here.
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Once you have decided on a path, a structured implementation is required. When selling, a professional sales checklist ensures that no step is forgotten – from obtaining the energy certificate to the appointment with the notary. A good agent can speed up the sales process by up to 40%. If you choose to rent out or use the property yourself, a long-term financial and management plan is essential. This is especially true for an heir community, where all agreements should be recorded in writing to avoid future conflicts. A clear strategy secures the property's value for the future.
Conclusion: Acting with awareness is the key to success
Do I always need a certificate of inheritance to sell an inherited property?
Not necessarily. If there is a notarised will or an inheritance contract naming you as the sole heir, this document, along with the probate court's probate protocol, is usually sufficient for land registry correction and the sale.
What is the difference between inheritance tax and capital gains tax?
Inheritance tax is levied on the value of the inherited assets, minus your allowances. Capital gains tax is additionally incurred if you sell the property at a profit before the 10-year holding period of the testator has expired and no exception (e.g. personal use) applies.
Who pays the ongoing costs of the property until the sale?
From the date of death of the testator, the community of heirs (or the sole heir) is responsible for all costs such as property tax, insurance, electricity, and heating. These costs are paid from the estate or must be shared by the heirs.
Can I simply sell my share of an inheritance community?
Yes, you can sell your inheritance share in its entirety to a co-heir or a third party. However, you cannot sell just your share of the property alone. The sale of the inheritance share must be notarised, and the co-heirs have a statutory pre-emption right.
What happens to the mortgage on the house?
Existing loans and mortgages are inherited by the heirs as part of the estate. They must continue to pay the instalments. Therefore, it is important to check the exact amount of the outstanding debt before accepting the inheritance.
How quickly must I inform the tax office about the inheritance?
You must inform the relevant tax office of the inheritance informally within three months of becoming aware of it. The tax office will then check whether an inheritance tax return is necessary.
Additional useful links
Bundesfinanzministerium offers comprehensive information on inheritance and gift tax.
Amtsgericht Segeberg provides information on the correction of the land register due to inheritance.
Statistisches Bundesamt offers data and information on construction prices and property price indices.
The Bundesnotarkammer provides a fee calculator for notary costs.
The Bundeszentrale für politische Bildung (bpb) offers a brief explanation of inheritance law.
The Deutsche Notarinstitut provides comprehensive information on notarial topics on its website.
The Bundesgerichtshof makes its case law database available.
FAQ
Do I always need a certificate of inheritance to sell an inherited property?
Not necessarily. If there is a notarised will or inheritance contract naming you as the sole heir, this document, along with the probate court's opening record, is usually sufficient for the land registry correction and the sale.
What is the difference between inheritance tax and capital gains tax?
Inheritance tax is levied on the value of the inherited assets, minus your allowances. Capital gains tax is additionally levied if you sell the property at a profit before the decedent's 10-year holding period expires and no exceptions apply (e.g., personal use).
Who pays the running costs of the property until it is sold?
From the date of the deceased's passing, the community of heirs (or the sole heir) is responsible for all expenses such as property tax, insurance, electricity, and heating. These costs are either covered by the estate or must be borne proportionally by the heirs.
Can I easily sell my share in an inheritance community?
Yes, you can sell your inheritance share as a whole to a co-heir or a third party. However, you cannot sell just your share of the property alone. The sale of the inheritance share must be notarised, and the co-heirs have a legal right of first refusal.
What happens to the mortgage for the house?
Existing loans and mortgages are transferred to the heirs as part of the inheritance. They must continue to pay the instalments. Therefore, it is important to check the exact amount of the remaining debt before accepting the inheritance.
How quickly do I need to inform the tax office about the inheritance?
You must inform the competent tax office of the inheritance informally within three months of becoming aware of it. The tax office will then assess whether an inheritance tax return is required.
