Precisely calculate inheritance tax real estate
Quickly and reliably determine the estimated inheritance tax for real estate. Our AI-powered calculator provides you with a solid basis for your decisions and helps to better plan the financial burden in the event of an inheritance.
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Understanding inheritance tax on real estate: Basics and current regulations
Tax Liability in the Event of Inheritance
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Valuation Procedures for Real Estate
The Role of Real Estate Value in Inheritance Tax Calculation
The exact value of your inherited property is the crucial basis for calculating the inheritance tax you owe. A higher property valuation can potentially lead to a higher tax burden. The tax office uses standardised methods (comparative value, income value, and intrinsic value methods) for determining value. Deviations from the actual market value are possible. Therefore, an accurate, neutral property valuation, like the one Auctoa offers using AI technology and optional expert reports, is essential. It forms the basis for correct tax calculation with our inheritance tax calculator and helps to avoid surprises or to challenge an overvaluation by the tax office.
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Tax classes and allowances: How to optimise your inheritance tax on real estate
The German inheritance tax law recognises three tax classes, which depend on the degree of relationship to the deceased. Tax class I (e.g. spouses, children, grandchildren) enjoys the highest personal allowances and the lowest tax rates. For spouses, the allowance is 500,000 euros, and for each child, it is 400,000 euros. In tax class II (e.g. siblings) and III (e.g. unrelated heirs), the allowances (usually 20,000 euros) are significantly lower and the tax rates are higher. Our inheritance tax calculator automatically takes these gradations into account. Early planning, such as through lifetime gifts (allowances usable every 10 years), can significantly reduce the tax burden.
Gift tax as a strategic option to reduce inheritance tax
The gift tax is the counterpart to the inheritance tax for asset transfers during a person’s lifetime. Tax classes, tax exemptions, and tax rates are largely identical. The key advantage: personal exemptions can be reused every ten years for gifts. Through strategic, staggered transfers of real estate assets, the future inheritance tax burden can be significantly reduced or completely avoided. Instruments such as the reservation of usufruct or residential rights provide security for the donor. A precise analysis of the individual situation is indispensable here. Auctoa supports you in evaluating the property as a basis for such planning.
Inheritance tax for rented properties: Special regulations and potential advantages
For residential properties rented for living purposes, the legislator grants a valuation discount of 10% under certain conditions (§ 13d ErbStG). This means that only 90% of the property's market value is taken into account for the inheritance tax calculation. This concession applies to properties located within Germany, the EU, or the EEA. The condition is that the property does not belong to privileged business assets or agricultural and forestry assets. The aim of this regulation is to promote the continuation of rental agreements. Our inheritance tax calculator can take this discount into account provided that you supply the relevant details.
The family home: Tax exemption on inheritance and its strict conditions
The family home used by the testator can, under certain conditions, be inherited tax-free by the surviving spouse or registered partner (§ 13 para. 1 no. 4b ErbStG). The requirement is that the heir uses the property immediately for their own residential purposes for at least ten years. There is no limit on the area here. For children (or grandchildren, if the children are predeceased), a similar tax exemption applies (§ 13 para. 1 no. 4c ErbStG), but the living area is limited to 200 sqm. If the obligation for self-use is violated within the ten-year period without compelling reason, the tax exemption is retrospectively revoked.
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Submitting an Inheritance Tax Return Correctly: Deadlines, Forms, and Necessary Documents
Following an inheritance event, heirs must notify the tax office of the acquisition within three months. Subsequently, the tax office usually requests the submission of an inheritance tax return. The deadline for this is generally at least one month. Necessary documents include, among others, the certificate of inheritance or the will, a detailed estate inventory with valuations (for which a property evaluation by Auctoa is helpful), evidence of the deceased's debts and inheritance-related costs. Careful and timely submission avoids late fees and inquiries.
International Inheritance Cases: Avoid Double Taxation and Credit Foreign Taxes
If real estate assets are located abroad or if the deceased or heir resides abroad, complex tax questions can arise. Germany taxes according to the worldwide income principle, meaning that overseas assets are also potentially subject to German inheritance tax. To prevent double taxation, double taxation agreements (DTAs) exist with many countries. If no DTA is present, inheritance tax paid abroad can, under certain conditions, be credited against the German tax (§ 21 ErbStG). Expert advice is essential in such cases to avoid tax disadvantages.
Legally optimize inheritance tax: Strategies for property owners to reduce their tax burden
There are various legal ways to minimise the burden of inheritance tax. These include the early transfer of real estate assets through gifts (utilising the 10-year period for allowances), the arrangement of usufruct or residential rights, the establishment of a family investment company (family pool), or the clever drafting of wills and inheritance contracts. The choice of marital property regime for spouses can also have an impact. Each strategy must be individually assessed and carefully planned. The Auctoa Inheritance Tax Calculator helps to understand the impact of different scenarios.
Estate liabilities and inheritance costs: These items reduce your inheritance tax
Various items can be deducted from the inherited assets, which reduce the tax base for inheritance tax. These primarily include the debts of the deceased (e.g. mortgages, loans). Furthermore, inheritance costs are deductible, such as costs for the funeral, tombstone, grave maintenance, reading of the will, certificate of inheritance, and expert fees for the valuation of the estate (e.g. property valuation by Auctoa). The tax office grants a flat rate of 10,300 euros for inheritance costs, without requiring individual proof. Higher costs can be claimed if appropriately evidenced.
