Anyone who inherits a house or apartment faces great opportunities—but also complex legal and financial challenges. Real estate in a will, tax aspects, loans, and the question of whether to inherit, sell, or refinance require good planning. We show you what heirs should pay attention to and what options are available.
1. In a nutshell
- Inheriting real estate can secure assets, but it can also bring liabilities.
- Consider tax aspects such as inheritance tax, allowances, and valuation procedures.
- Loans, ancillary costs, and ongoing obligations must be reviewed.
- Selling, refinancing, or renting are possible strategies, depending on your life situation and financial capacity.
2. Real estate in a will
A will or inheritance contract specifies who will receive the property. Clearly defined succession rules—and avoiding communities of heirs—prevent disputes between heirs.
- Check whether the property is being inherited individually or jointly.
- Testamentary conditions can influence the use or sale of the property.
- Involve a notary in good time to ensure that the transfer is formally correct.
- Incidentally, it is best to arrange the transfer of the property BEFORE the inheritance occurs.
3. Tax aspects
Inheritances in Germany are subject to inheritance tax, with allowances (“Freibeträge”) depending on the degree of kinshipand the market value of the property determining the tax burden. A tax advisor can provide precise information and create planning security.
4. Taking over loans
Many properties are still encumbered by existing loans. Heirs must:
- Check whether the loan can be taken over or must be redeemed.
- Clarify with the bank whether special repayments, installment adjustments, or debt restructuring are possible.
- Clarify with the bank whether, if necessary, a further loan can be taken out to pay the inheritance tax.
- Include ongoing costs such as property tax, insurance, and maintenance in the financial planning.
5. Sale or refinancing
After receiving the property, heirs are faced with a decision:
- Sale: provides immediate liquidity, avoids potential disputes among the community of heirs, should be accompanied by a tax advisor, legal counsel, and, if necessary, an appraiser.
- Refinancing: if the terms are right and the bank agrees, this provides peace of mind for the time being. In such a case, however, follow-up financing should be tackled early (at least 36 months before the interest rate expires) to avoid surprises.
- Division among heirs: If there are several heirs, a division or compensation payment may be sensible and necessary. In this case, a valuation report should first be prepared by an expert appointed by all parties or even a sworn expert in order to determine the value of the property. Unfortunately, the realistic value of a property is far too often lower than the wishes of those involved.
It is crucial that the decision fits in with personal goals, financial situation, and living circumstances.
6. Recommendations for action
- Seek legal advice in good time to ensure you understand inheritance and wills correctly – ideally before the inheritance occurs.
- Seek tax advice to optimize allowances and minimize potential tax burdens.
- Hold financing discussions with banks or – even better – an independent mortgage broker at an early stage to clarify loans and financing options.
- Compare options: sale, rental, or owner-occupancy – which best suits your situation?
7. Recommendation
Inheriting real estate is a great opportunity, but it can also involve risks. If you are familiar with the legal, tax, and financial aspects and plan early on, you can make the best use of the property—whether as living space, an investment, or to secure liquidity.
With careful preparation and professional advice, you can avoid pitfalls and take full advantage of the opportunities offered by inherited real estate.