Inheritance tax – when the inherited property becomes unaffordable

Keeping inherited real estate is almost only feasible if one can afford the exorbitant inheritance tax. The family home is increasingly becoming a financial burden for heirs. Why is this the case, and how can one escape this cost trap?

Inherited property is often meant to remain within the family, as it's usually tied to many cherished memories. However, if inheritance tax on the house or apartment leads to financial ruin, heirs face a difficult situation. After all, very few people have €500,000 or more readily available. Often, the tax burden even reaches into the millions.

That's why inheritance tax is becoming increasingly expensive

Inheritance tax has become more expensive in recent years, primarily due to rising property prices. The amount of tax payable depends on the property's value, and prices have risen sharply, especially in major cities. Meanwhile, tax-free allowances have not been increased for years. Another reason for the high tax burden is the tax office's method of calculation. They often fail to consider the current market conditions and the specific property in question. This can result in a higher tax base and, consequently, a higher assessed value.

Ways to deal with inheritance tax

Anyone who doubts the tax office's valuation can file an objection within one month. A new appraisal must then be prepared, which will also stand up in court. The valuation must be carried out by a sworn and publicly appointed expert.

Some tax offices are open to negotiation. If the tax cannot be paid immediately, a deferral or payment plan can sometimes be arranged. Heirs can also try to take out a loan against the property. This must then be repaid, taking interest into account. However, this method also leads to a financial burden.

Selling as a last resort

If the inheritance tax is too high and no alternative is feasible, many heirs are left with no option but to sell the property. To avoid losing money in the process, heirs should have the property professionally appraised and develop a pricing strategy. After all, the proceeds from the sale must be used to pay the tax. A real estate agent can provide professional support and sound advice on inherited property. Together with the agent, alternative solutions can also be explored.

Are you unsure what the best solution is for your inherited property? Contact us! We'd be happy to advise you and work with you to find a solution.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

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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