A field with a map and a house standing in the countryside, surrounded by grass and trees. - ©© Francescoscatena/Depositphotos.com

Inherited property? Here's what you need to know in 2022

Every year, large fortunes are inherited in Germany. Often, this includes real estate such as land. As with a house, the question arises with undeveloped land: "What should be done with it?" Since this year, there has been an additional challenge.

Property tax was reformed last year. Around 35 million properties will have to be revalued by the end of 2024. Property owners have work to do.

What owners need to do now

Anyone who has owned a property – a house, apartment, or plot of land – since January 1, 2022, must submit a separate property tax return electronically via the Elster tax platform between July 1 and October 31, 2022. Seek advice from a real estate professional and tax advisor.

Inherited property – what now?

First, several questions arise: Is there a sole heir or a community of heirs? Was the inheritance settled in a will or does statutory succession apply? Does inheritance tax have to be paid? This depends on the degree of kinship and the value of the property.

A local real estate agent will determine the value of the property. Depending on the degree of kinship, there are different tax allowances. For children, for example, this is 400,000 euros. If the property is worth less after a professional valuation, no inheritance tax is payable. Siblings of the deceased have an exemption limit of €20,000. If the property is worth more, inheritance tax must be paid. In any case, consult a tax professional to find out whether you owe tax and, if so, how much.

Real estate and community of heirs

The community of heirs must decide jointly what is to become of the jointly inherited property. If one of the heirs wishes to keep the property, they must pay out the other heirs. This is again based on a valuation by a real estate professional. The same applies if the property is to be sold. Is it worth leasing the property? Or can the property be divided? To find out what the best solution is for your property, you should seek advice from a local quality real estate agent. If the heirs cannot agree, there is a risk of foreclosure. This should be avoided, as real estate is often auctioned off below its value.

Costs associated with inheriting land

Heirs must pay property tax. In addition, the transfer of ownership from the deceased to the heir must be documented in the land register. If this is done within two years, no fees are payable. However, a certificate of inheritance may be required for a transfer of ownership, for example if there is no will. The fees for this depend on the value of the inheritance.

Are you unsure what to do with your property? Contact us! We will be happy to advise you.

Notes

For reasons of readability, the generic masculine form is used in this text. Female and other gender identities are expressly included where necessary for the meaning of the text.

Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific case.

Photo: © Francescoscatena/Depositphotos.com

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