Selling an inherited home in Germany: heirs, register, tax

First: whether to inherit

An inheritance can be disclaimed (Ausschlagung), but only within six weeks from the moment the heir learns of the death and of the ground for his call as heir (section 1944 BGB). If a will is involved, the period does not start before the probate court announces it. The period is six months where the deceased last lived only abroad or where the heir is abroad when the period begins (section 1944(3)). The longer period is the one that matters for heirs living abroad.

Proving who owns the property

The land registry registers a new owner only on proof. Section 35(1) of the Grundbuchordnung (GBO) says the succession can be proved only by an Erbschein or a European Certificate of Succession. If the succession rests on a will or inheritance contract contained in a public deed, it is enough to submit that deed and the minutes of its opening; the registry can still ask for an Erbschein if it is not convinced. The Erbschein is issued by the probate court on application (section 2353 BGB). For a property worth less than €3,000 the registry may accept other evidence (section 35(3)).

The registry fee for entering the owner (GNotKG 14110, rate 1.0) is not charged for the heirs of the registered owner if the application reaches the registry within two years of the death. The same holds when heirs are only registered after a partition of the estate.

Several heirs: acting together

From the death, the estate becomes the joint property of the heirs (Erbengemeinschaft, section 2032 BGB). Section 2040(1): the heirs can dispose of an estate asset only jointly, so all of them must sign the sale. Each co-heir can demand partition (Auseinandersetzung) at any time unless the law provides otherwise (section 2042(1)). A sale to a third party therefore needs every co-heir’s signature.

Transfers inside the group are favoured in tax: the Grunderwerbsteuer (real estate transfer tax) does not apply to the acquisition of land by inheritance (section 3 no. 2 GrEStG), nor to an acquisition by co-heirs for the partition of the estate (no. 3). A sale to an outsider, in contrast, is a taxable acquisition for the buyer, at the rate of the state where the property lies (3.5% to 6.5%); see the guide on the real estate transfer tax.

The sale itself

The sale contract must be notarised (section 311b(1) BGB). The seller side must show a valid energy certificate to buyers, issuing one if none exists (section 80(3) and (4) GModG). If the property is mortgaged, the land charge stays in the register until deleted; see the guide on the land charge. The general cost lines of a sale are in the guide on selling a home in Germany.

Income tax: the ten-year clock

Section 23(1) EStG makes the sale of land taxable if not more than ten years separate acquisition and sale. For free-of-charge acquisition, such as inheritance or gift, the acquisition by the previous owner is attributed to the successor (section 23(1) sentence 3). So:

• If the deceased bought the home more than ten years before the sale, a sale by the heir falls outside the rule.
• If the deceased bought it within the last ten years, a sale by the heir is within the rule unless an exception applies.

The statute’s exception for own use (exclusive own residential use, or own use in the year of the sale and the two before) still applies by its wording. How it works for an heir who moved in, or for a home the deceased used, is not spelled out in section 23, so ask a tax adviser. The €1,000 threshold, the calculation of the gain and the position of non-residents are in the guide on capital gains tax and the ten-year rule.

Inheritance tax and the family-home exemption

Section 13(1) nos. 4b and 4c ErbStG exempt the inheritance of a family home from inheritance tax in two cases: by the surviving spouse or registered partner, and by the deceased’s children and the children of deceased children, in the latter case only up to 200 square metres of living space. The home must have been the deceased’s own residence and must be intended by the heir for his own residence without delay. The exemption falls away retroactively if the heir stops using the home as his own residence within ten years of the inheritance, unless compelling reasons prevent self-use. A sale within that period ends self-use. The conditions and the allowances are covered in the guide on inheritance tax on property.

Which professional to consult

A notary records the sale and can advise on the succession documents (see the notary page). A lawyer in inheritance law deals with disputes between heirs; Payotte does not list lawyers. A property valuer values the property for partition and for tax (see the valuer page), and a real-estate agent markets it (see the agent page).