Inheriting a flat raises many questions. This guide provides you with a clear roadmap to set the right financial and legal course. This way, you can turn a complex situation into a strategic opportunity.
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The topic briefly and concisely
Within two years after the inheritance event, the land register correction is free of charge.
The inheritance must be reported to the tax office within three months.
An objective property valuation is the crucial foundation for all subsequent steps such as selling, renting, or partitioning within an inheritance community.
Have you inherited a property and are wondering what the next steps are? This situation combines the emotional value of the inheritance with significant financial responsibility. Many heirs feel overwhelmed by the tasks ahead – from updating the land register to dealing with inheritance tax. This article systematically guides you through the seven most important phases. You will receive data-driven recommendations and practical tips to make informed decisions and avoid costly mistakes. With the right strategy, you can preserve the value of your inheritance for the future.
Step 1: Establish legal foundations and meet deadlines
After inheriting a flat, the next steps are of a legal nature. First, you must have your ownership officially recognised. For this, you usually need a certificate of inheritance, which you apply for at the probate court. If there is a notarised will, this document may suffice. Subsequently, it is mandatory to update the land register. If you submit the application within two years of the inheritance, the usual fees of several hundred or thousand euros are waived. Note the six-week deadline from when you become aware of the inheritance if you wish to renounce the inheritance, for example, due to high debts. These fundamental measures lay the foundation for all further considerations.
Step 2: Inform the tax office and check the inheritance tax
One of the most important obligations is to report the inheritance to the tax office, which must be done within three months. The tax office then assesses whether and how much inheritance tax is due. The amount depends on the market value of the property and your degree of kinship with the deceased. For spouses, an exemption of 500,000 Euros applies, for children 400,000 Euros. Siblings or nieces and nephews have a significantly lower exemption of 20,000 Euros. An exception exists if you, as a spouse or life partner, continue to live in the apartment for at least ten more years – then the tax may be waived. A precise calculation is crucial to avoid financial bottlenecks, and an early tax assessment gives you planning security.
Step 3: Use an objective property valuation as a basis for decision-making
Before deciding what should happen with the inherited apartment, you need a realistic assessment of its value. A professional and data-driven evaluation is the foundation for all further financial considerations. The value determined by the tax office may differ from the actual market value. An independent appraisal protects you from misjudgements that could cost you thousands of euros. Modern AI-powered tools such as the Auctoa Inheritance Manager provide you with a precise analysis in no time. This way, you’ll know exactly what your inherited property is worth and can act based on facts instead of emotions. This evaluation is essential not only for tax purposes but also for sales negotiations or division in an heir community.
Step 4: Finding consensus in the community of heirs
If you have inherited the apartment not alone, but together with other people, you form a community of heirs. In this community, all decisions must be made unanimously, which often leads to conflicts. The management and ongoing costs, such as property tax or repairs, must be borne jointly by all co-heirs. To avoid lengthy and costly disputes, a clear strategy is necessary. Here are the most common solutions:
Joint Sale: The property is sold, and the proceeds are distributed according to the inheritance shares. This is often the simplest solution.
Payout: One heir takes over the apartment and pays off the other co-heirs. This requires an exact valuation and the necessary liquidity.
Joint Rental: The heirs become a landlord community. This ensures ongoing income but also requires joint management.
Partition Auction: If the heirs cannot agree, any co-heir can apply for a public auction. However, this often leads to financial losses of 15-20% below the market value.
An external decision-making aid for communities of heirs can help objectively determine the best option.
Step 5: Weighing options - Sell, Rent, or Use yourself
The central question about the first steps is: What to do with the inherited apartment? Each of the three main options has specific financial and personal consequences. A careful consideration is crucial for long-term success. A calculator for sale or rental can provide initial guidance here.
Here is an overview of the options:
Sell: This provides quick liquidity and frees you from the responsibility of maintenance. Check the speculation period: If less than ten years have passed between the original purchase by the testator and the sale, a speculation tax will be levied on the profit.
Rent: This option creates a long-term source of income and maintains the property value. However, consider the administrative effort and the maintenance costs, which can quickly reach 1-2 euros per square meter per month.
Personal use: You save on rent and can preserve the emotional value of the inheritance. This option can exempt you from inheritance tax if you live in the apartment for at least 10 years. However, you must cover all ongoing costs and any potential renovations yourself.
Step 6: Analyse ongoing costs and refurbishment needs
With the inheritance of a flat, you also take on all ongoing costs. These include the monthly service charge, property tax, insurance, and contributions to the maintenance reserve of the owners' association. These costs can quickly add up to several hundred euros per month. Pay particular attention to the condition of the property. Inheriting a house in need of renovation can lead to unforeseen expenses. Have the condition of the building fabric, heating, and windows checked to realistically assess the financial outlay required for necessary modernisations. This analysis is crucial for determining the profitability of renting or the fair selling price.
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If the decision is made to sell, a well-thought-out strategy is the last step. A detailed checklist for selling property helps ensure nothing is overlooked. Clarify the tax aspects in advance. The most important rule is the ten-year speculation period. If this period has not yet expired since the purchase by the deceased, you must tax the sale profit at your personal income tax rate. An exception applies if the property was owner-occupied in the year of sale and the two preceding years. A careful examination of what taxes arise from the sale protects against unpleasant surprises and maximises your net proceeds.
Conclusion: A strategic approach secures the value of your inheritance
What are the very first steps when I've inherited an apartment?
Check whether you want to accept the inheritance (6-week deadline for renouncing it). Apply for a certificate of inheritance or use a notarised will as proof. Then have the land register corrected to your name.
What are the allowance thresholds for inheritance tax?
The allowances depend on the degree of kinship. For spouses, it is €500,000, for children €400,000, for grandchildren €200,000, and for siblings as well as most other heirs only €20,000.
What is a certificate of inheritance and do I always need one?
The certificate of inheritance is an official document that identifies you as the rightful heir. You need it for land register corrections if there is no notarised will or inheritance contract. Applying for it incurs a fee.
Who covers the ongoing costs of the inherited apartment?
Until a final decision is made regarding the apartment (sale, rental, etc.), the heir(s) (the community of heirs) must cover all ongoing costs such as service charges, property tax, insurance, and any loan installments.
What does the ten-year rule mean in the case of a sale?
This rule refers to speculation tax. If you sell the inherited apartment before the decedent has owned it for ten years, you must tax the profit made. The period starts with the decedent's purchase date, not the date of inheritance.
What to do if the community of heirs cannot agree?
If no agreement on sale, rental, or payout is possible, any co-heir can apply for a partition auction at the district court. This is often the least economical solution, as the proceeds are usually below fair market value.
Additional useful links
The Federal Ministry of Finance provides comprehensive information about inheritance and gift tax.
A detailed article about inheritance tax in Germany is available on Wikipedia.
The Wirtschaftsdienst analyzes the declining revenues from inheritance and gift tax.
The full text of § 1931 BGB (Legal Succession of the Spouse) can be found on Gesetze im Internet.
The Federal Statistical Office provides information about construction and real estate price indices.
Detailed tables on house and land prices are provided by the Federal Statistical Office.
FAQ
What are the very first steps when I have inherited a flat?
Check whether you want to accept the inheritance (6-week deadline for disclaimer). Apply for a certificate of inheritance or use a notarised will as proof. Then have the land register updated with your name.
What are the allowances for inheritance tax?
The tax-free allowances depend on the degree of kinship. For spouses, it is €500,000, for children €400,000, for grandchildren €200,000, and for siblings as well as most other heirs, only €20,000.
What is a certificate of inheritance and do I always need it?
The certificate of inheritance is an official document that identifies you as the rightful heir. You need it to update the land register if there is no notarised will or contract of inheritance. Applying for it incurs a fee.
Who bears the ongoing costs of the inherited apartment?
Until the final decision is made regarding the property (sale, rental, etc.), the heir(s) (the community of heirs) must bear all ongoing costs such as service charges, property tax, insurance, and any loan installments.
What does the ten-year period mean when selling?
This deadline refers to capital gains tax. If you sell the inherited apartment before the deceased person has owned it for ten years, you must pay tax on the profit made. The period starts from the purchase date of the deceased, not the date of inheritance.
What to do if the community of heirs cannot reach an agreement?
If no agreement can be reached on selling, renting, or paying out, any co-heir can apply for a partition auction at the district court. This is often the least economical solution, as the proceeds are usually below the free market value.
