Inherited Property in Germany? Here's What You Need to Do
Losing a loved one is hard. Navigating German property inheritance law doesn't have to be. Here's your complete, plain-English guide.
First Steps After Inheriting Property in Germany
The first few weeks after inheriting property can feel overwhelming. There are legal deadlines, tax forms, and decisions to make. Here's what you actually need to do.
Get an Erbschein (Certificate of Inheritance)
An Erbschein proves you're the legitimate heir. The Finanzamt (tax authority) and the Grundbuchamt (land registry) will ask for it. You apply through the Amtsgericht (district court) in the district where the property is located—usually within Germany, though the rules vary.
Note: If the deceased left a valid will or Erbvertrag (inheritance contract), and the banks/authorities accept it, you might not need an Erbschein. But it's safer to get one for the property transfer.
Update the Grundbuch (Property Register)
Your name needs to go into the Grundbuch. You'll need:
- The Erbschein (or valid will)
- A certified copy of the death certificate
- Your ID / Reisepass (passport)
The Notar (notary) handles this or you can do it yourself at the Grundbuchamt. It typically costs €100–300 in Notar fees. This must happen before you can legally sell or mortgage the property.
Check for Mortgage and Debts
You inherit debts too. Check the Grundbuch for Einträge (entries) showing mortgages, liens, or other claims on the property. The Finanzamt may also have a Grundschuld (charge) if property taxes were unpaid.
Bad news: You're liable for these. If the mortgage is larger than the property's value, you might want to disclaim the inheritance entirely (within 6 weeks). Talk to a lawyer before you decide.
Check for Nießbrauch or Wohnrecht (Usufruct or Right to Live There)
Sometimes the deceased granted a surviving spouse the right to live in the property for life (Nießbrauch or Wohnrecht). This is registered in the Grundbuch. You own the property, but someone else has the right to live there rent-free, forever.
This dramatically affects the property's value and your tax liability. Get professional advice immediately if you see this entry.
Erbschaftsteuer (Inheritance Tax)—The Big One
Germany taxes inheritance. How much you pay depends on three things: your relationship to the deceased, the value of the estate, and your Freibetrag (tax-free allowance).
Tax-Free Allowances (Freibeträge) by Relationship
Grandchildren (if parent deceased): €200,000
Siblings / Nieces / Nephews: €20,000
Spouse: €400,000 (plus other benefits)
Tax Rates: 7% to 30%
Once you exceed your Freibetrag, you pay inheritance tax. The rate depends on how much over the limit you are and your relationship to the deceased:
- Close relatives (children, spouses): 7%, 15%, 19%, or 30% depending on amount
- Grandchildren (if parent deceased): 15%, 24%, 31%, or 50%
- Siblings, others: 30%, 40%, or 50%
Example: You inherit a €500,000 apartment. As a child, your first €400,000 is tax-free. On the remaining €100,000, you pay 7% = €7,000 in inheritance tax.
Sounds manageable? The problem is how the Finanzamt values the property.
How the Finanzamt Values Your Property—And Why They Often Get It Wrong
The Finanzamt uses standardized formulas to value inherited real estate. They typically overvalue properties, especially in Berlin where market values fluctuate wildly.
The Finanzamt might value your €380,000 apartment at €500,000. This inflates your taxable inheritance by €120,000. Depending on your bracket, that's €8,400+ in extra tax you didn't expect to pay.
The 6-Month Rule: Act Now
You have the strongest legal position if you commission your Verkehrswertgutachten within 6 months of the Erbfall (date of death). After 6 months, the Finanzamt may challenge your valuation more aggressively. Get this done immediately.
The Familienheim Exemption—The Tax Benefit Most People Miss
Germany offers one of the most generous inheritance tax breaks in the world. If you move into the inherited property and live there as your primary residence for 10 consecutive years, the entire property can be completely tax-free.
No tax. Zero. Not 7%, not 1%—nothing.
How It Works
- Move in: Register your primary residence (Hauptwohnsitz) at the property
- Live there: 10 consecutive years
- No sale: Don't sell the property during this 10-year period
- Size limit: Maximum 200 m² for children; spouses have no limit
- Result: Complete tax exemption
This isn't a deferral—it's a complete waiver. If you're considering keeping the property anyway, this single benefit can save you €20,000–€80,000+ in tax.
Example: You inherit a €600,000 apartment. Normally, you'd owe ~€28,000 in tax (€200,000 over the €400,000 limit × 7% to 15%). Move in and live there for 10 years? €0 tax.
What Should You Do With the Property? Your Four Options
Option 1: Keep It and Live In It (Best Tax Benefit)
Move in. Register your primary residence. Claim the Familienheim exemption. After 10 years, you own a mortgage-free property with zero inheritance tax. This is the most tax-efficient path if you want to live in Germany.
Option 2: Keep It and Rent It Out
You become a landlord. German rental law is strict (strong tenant protections), but the tax deductions are generous:
- Werbungskosten (Operating expenses): Mortgage interest (not principal), property tax, insurance, utilities you pay, repairs, maintenance
- Afa (Depreciation): You can depreciate the building value (not the land) over 50 years. This creates a paper loss that can offset other income.
- Restnutzungsdauer-Gutachten: A valuation of the building's remaining useful life. This determines how much Afa you can claim annually. If done correctly, it can significantly reduce your taxable rental income in the early years.
The catch: You'll owe Einkommensteuer (income tax) on rental profit. But German rental law makes eviction very difficult, so this is a long-term play.
Option 3: Sell It
If you sell, check the Spekulationssteuer (capital gains tax) rules. Good news: If the deceased owned the property for 10+ years before dying, you inherit their holding period. There's no capital gains tax on your sale, no matter when you sell.
Example: Your parent bought the apartment 15 years ago. They died. You sell 1 year later. Because they owned it 10+ years, you pay zero Spekulationssteuer, even though you technically only held it 1 year.
But if the property was owned less than 10 years and you sell within 10 years of inheritance, you'll owe capital gains tax. Typically 26.375% on the gain (Kapitalertragsteuer + Soli + church tax).
Option 4: Share With Siblings (Erbengemeinschaft)
If you inherit together with siblings, you're in an Erbengemeinschaft (heir community). Everyone owns the property together. To buy out siblings, refinance, or sell, everyone must agree.
This gets complicated fast. If one sibling wants to sell and another wants to keep it, you're stuck. The only way out is Teilungsversteigerung (forced auction), which usually results in the property selling below market value. Everyone loses money.
A professional property valuation helps negotiate a fair buyout price. If one sibling buys out the others at fair market value (with proper documentation), at least there's no claim of unfairness later.
Erbengemeinschaft: The Sibling Problem and How to Solve It
Inheriting with siblings is more complicated than most people realize. Here's why.
What Is an Erbengemeinschaft?
When multiple heirs inherit the same property, you don't each own a 50% stake individually. You're all co-owners of 100% of the property. None of you can sell, mortgage, or rent it out without the others' permission.
This sounds fine until someone wants to do something different. One sibling wants to keep the apartment. Another wants to sell and split the cash. A third moved to Canada and doesn't care. Now what?
Avoiding Teilungsversteigerung (Forced Auction)
Without agreement, the only legal way out is a Teilungsversteigerung—a forced auction conducted by the court. The property sells to the highest bidder, and the proceeds are split.
The problem: Forced auctions rarely fetch market value. Banks are cautious. Buyers demand a discount. A €500,000 apartment might sell for €380,000 at auction. Everyone loses €120,000, even the sibling who wanted to keep it.
The Solution: Fair Valuation and Negotiation
Get a professional Verkehrswertgutachten. With an independent, certified market valuation, siblings can negotiate a fair buyout. One sibling buys the others' shares at market price. Transfers happen cleanly. No forced auction. No hidden resentment.
The Gutachten cost (typically €800–1,500) is a fraction of what you'll lose in an auction.
Tax Optimization After Inheriting
Once you've declared the inheritance to the Finanzamt and paid the initial tax, there are still ways to optimize your position.
Restnutzungsdauer-Gutachten (Useful Life Appraisal)
If you're renting the property, this specialist valuation determines how much of the building value you can depreciate annually. Older buildings (say, 1920s Gründerzeit in Berlin) have a shorter useful life, meaning higher annual Afa deductions.
Nachlassverbindlichkeiten (Estate Liabilities)
Funeral costs, legal fees (Notar, lawyer), and the Gutachten costs can be deducted as Nachlassverbindlichkeiten. This reduces your taxable estate value. Keep all receipts.
Werbungskosten (Operating Deductions) for Rental
If renting, deduct everything: mortgage interest, property tax (Grundsteuer), buildings insurance, water, utilities you cover, repairs, maintenance, management fees. These are dollar-for-dollar deductions against rental income.
Your Step-by-Step Checklist
Weeks 1–2: Immediate
- Register the death with the Standesamt (civil registry)
- Obtain a certified death certificate (mehrgliedrige Urkunde)
- Apply for the Erbschein at the Amtsgericht
- Contact a Notar to arrange Grundbuch transfer
- Identify any mortgages or liens in the Grundbuch
- Check for surviving spouses' rights (Nießbrauch/Wohnrecht)
Weeks 2–6: Critical
- Commission a Verkehrswertgutachten immediately (within 6 months of death for strongest legal position)
- Notify the Finanzamt of the inheritance (within 3 months)
- Gather documents: will, mortgage statements, property tax assessments, utility bills
- Decide: Keep, sell, rent, or share with siblings?
- If multiple heirs: Negotiate using the valuation
Weeks 6–12: Tax Filing
- Submit Erbschaftsteuererklärung (inheritance tax return) with professional valuation
- Pay inheritance tax by the deadline
- Register the property transfer in the Grundbuch
- If renting: Set up rental income accounting and quarterly tax filings
- If keeping to live in: Register your primary residence (Hauptwohnsitz)
Year 1 Onwards: Ongoing
- File annual Einkommensteuer (income tax) return if renting
- Pay Grundsteuer (property tax) annually
- Maintain the property; keep all receipts for deductions
- If planning to sell: Do so before 10-year mark to avoid Spekulationssteuer (if property owned <10 years before inheritance)
- If planning Familienheim exemption: Live there continuously for 10 years
Ready to Get Your Verkehrswertgutachten?
A professional property valuation is the foundation of good inheritance tax planning. We deliver certified, English-language valuations that hold up in front of the Finanzamt and German courts.