
Inherited property: Is it too expensive to use for personal purposes?
How much inheritance tax do I have to pay?
Heirs often have no other option but to sell the property because they cannot afford the inheritance tax. Spouses and children are exempt from inheritance tax if they use the property themselves for at least ten years after the inheritance. Exemptions also apply to other close relatives such as grandchildren or nieces and nephews. However, if you inherit from your uncle or aunt, for example, this exemption is only €20,000. The property is most likely worth more than this. In addition, the tax rates increase the further removed you are from the deceased. For example, if you inherit a property worth $400,000 from an aunt, you will have to pay 25 percent tax in tax class 2, which is where nieces and nephews are classified. With an allowance of €20,000, you will therefore have to pay tax on €380,000 at this tax rate. This results in a tax payment of €95,000.
Is there still a mortgage to pay off?
Even if you do not have to pay high taxes, it is important to check whether the mortgage on the property has already been paid off. This is because you not only inherit the property itself, but also the debts owed to the bank.
Do I have to pay out my co-heirs?
If you are not the sole heir to the property, you cannot simply move into the property without the consent of your co-heirs. In order to become the sole owner of the property and be able to decide freely about it, you must pay out your co-heirs. How much they are entitled to depends on the value of the property. It is best to have this calculated by a real estate expert. Any outstanding mortgages are of course also included in the calculation of the redemption amount. If you are unable to pay the full amount immediately, it is also possible to agree on installment payments with your co-heirs or take out a loan from the bank.
Are expensive renovations necessary?
Experts also advise you to factor in any maintenance costs. Many older people have neglected repairs and modernization work on their homes in the years before their death. This means that the roof may need to be replaced urgently, the basement may be damp, or poor insulation may lead to high heating costs in winter. Major renovations to the house can quickly run into five figures. It is therefore advisable to have the property inspected by an expert before making your decision, who can tell you what costs you can expect.
Is maintaining your inherited property too expensive and would you rather sell? Contact us now. We will be happy to advise you. Legal notice: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific case clarified by a lawyer and/or tax advisor.
Photo: Elnur_ / Depositphotos.com