So that the inherited property doesn't become too expensive

For many, an inherited property is the only way to fulfill their dream of homeownership. However, it often turns out that living in it yourself isn't so cheap. To avoid getting into debt despite inheriting a property, you should ask yourself a few important questions.

Do I have to pay inheritance tax?

Professional real estate agents are familiar with this: Heirs frequently approach them, tasking them with selling inherited properties because they cannot afford the inheritance tax. If a spouse or children inherit a property, they are exempt from inheritance tax if they use it as their primary residence for at least ten years. Other relatives, such as grandchildren, nieces, and nephews, have tax-free allowances. For example, someone inheriting from an uncle or aunt has a tax-free allowance of €20,000. In many cases, a property is worth more than this, and the tax rates increase the more distant your relationship is to the deceased.

For example: If you inherit a property worth €300,000 from your uncle, you'll be subject to 25 percent inheritance tax. Due to the €20,000 allowance for nieces and nephews, €280,000 would be taxable. This would mean you would have to pay €70,000 in inheritance tax.

Is there a mortgage on the property?

Both assets and debts can be inherited. If the mortgage on a property is not yet paid off, you will inherit it along with the property. Therefore, real estate experts advise finding out early on whether there are any outstanding debts with the bank and how much they amount to.

How much do I have to pay my co-heirs?

If you are not the sole heir, you are part of a community of heirs. In this case, you can only decide what should happen to the property together with your co-heirs. If you wish to live in the property yourself, you must not only reach an agreement with your co-heirs but also, as a rule, buy them out. How much the co-heirs are entitled to depends on the value of the property and how many heirs there are. A local, reputable real estate agent will determine the value of your property. Any existing mortgage on the property will be factored into the payout amount to the co-heirs.

Does the property require expensive renovations?

Real estate experts recommend factoring in potential maintenance costs. As homeowners get older, they often neglect extensive repairs and renovations. Does the roof need replacing? Is the basement damp? Is poor insulation causing high heating bills in winter? Major renovations can quickly become expensive. An expert can advise you on potential costs during an on-site inspection.

Is the upkeep of your inherited property too expensive and would you prefer to sell? Contact us now. We'd be happy to advise you.

You can find more information here:

https://www.erbrecht-ratgeber.de/erbrecht/erbschaft/haus-geerbt.html

https://www.anwalt.org/erbengemeinschaft-haus/

https://www.testament-erben.de/erbrecht-haus-geerbt-was-nun.html

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

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