Happy is he who inherits a house. Most citizens assume this is the case. In about one in two estates in Germany, a property is now inherited, mainly from a partner, children, grandchildren or other relatives. However, a renovated, debt-free luxury property in a coveted downtown location doesn’t fall into the hands of every heir. Not everyone is the only heir and can freely dispose of everything. Not everyone can keep the house or easily pay the tax office what they may ask for. And so sometimes even the inherited villa becomes a burden, not to mention the disputes in the family. “It is important to get information and advice. It is not easy to correctly assess the value and consequences of inheritance, ”explains Jan Bittler, Managing Director of the German Association for Inheritance and Inheritance Law (DVEV). Heirs should be aware of the following:
Six weeks to think about it
So many beneficiaries not only fall into a house or fortune overnight, but often also a pile of inherited debts and liabilities. The dilemma: to choose savings stockings, stocks and valuable furniture, but reject the dilapidated terraced house, which is mortgaged to the roof, is not possible. Anyone who inherits ugly things from their parents, grandparents or sister, for example, must take responsibility for them, including for loans. Inheritance only works on the principle: all or nothing. When it comes to making the momentous decision not to accept an estate that includes the house in the first place, but to refuse it, it is important to be in a hurry. There is only a six week deadline for this. It starts running as soon as you hear of your mother or aunt’s death. If there is a will or contract of succession, the countdown begins from the moment the disposition is opened. Every day counts. If the deadline is exceeded, the succession is automatically considered to be accepted.
Investigate the situation
Anyone who wants to know how the value and feel of the legacy home actually evolves should get a quick overview. The heirs have the right to request an extract from the land register. This shows whether the house is still burdened with land charges and mortgages. Banks of the deceased can provide information on additional debts, possible rental income and credit balances. The heir must either present a valid power of attorney after death, a health care power of attorney or a notarial will. It is also important to check the structural condition of the house with the help of experts. What about the masonry, heating, water pipes, cellar, roof? Old homes often need to be renovated, which can get expensive. Based on all this data, experts can assess the market value – and the heir must decide whether it is profitable for him to take over the estate.
Take into account the tax
Relatives who inherit a house – that is, spouses, children or grandchildren – usually don’t have to worry too much about the taxman – as long as they don’t leave behind them. huge fortunes, blocks of shares, a luxury villa or multiple properties in the best location at high price. A wife, for example, can inherit up to 500,000 euros from her husband without paying taxes. The same goes for registered life partners. Children can receive securities up to 400,000 euros tax-free from each parent, grandchildren up to 200,000 euros. However, taxes are due for property above the exemptions. For example, when a girl inherits a building in Munich worth several million euros. “In such cases, the advice of a tax advisor is essential,” says Bittler. Nowadays, it is also interesting for illiquid heirs to take out a loan to pay the inheritance tax, depending on the individual case. Anyone who inherits property such as a house must notify their tax office within three months. The authorities will then send a declaration of inheritance or gift tax which must be completed.
Special case: residential building occupied by its owner
In addition to the tax-free allowance, there is an additional benefit for spouses, legal partners and children. For them, the home for personal use remains tax-exempt in the event of inheritance – provided that they already live there or that the children move in in the event of inheritance. The heirs must also live there for ten years. During this period, the property cannot be rented or used as a second home. Exception: the heir must go to a retirement home. For children, there is an additional rule that no inheritance tax is due up to a maximum of 200 square meters. It doesn’t matter if it’s a modest apartment or a luxury villa. Example: A child inherits a house worth 500,000 euros and 250 square meters of living space from his mother. 200 of them remain tax-exempt, the remaining 50 are not. With a market value of 50,000 euros, they benefit from the tax exemption of 400,000 euros, there is no inheritance tax.
The community of heirs
Three siblings – and a house. Or: mother-in-law, a child – and a house. Such constellations of heirs within a family exist very often, as estate attorney Bittler explains. Whatever the relationship between the heirs of the house: If they inherit together, they always form a community of heirs, neither can act without the other. The fact that everyone comes together rarely works because of mostly different interests, Bittler points out. “If one wants to stay, the second wants to rent it, the third wants to sell or get paid.” The result is usually a bitter family dispute and years of vacancy. If the heirs can’t agree on what will happen to the house, ending the auction is often the worst case for everyone, warns Bittler.
Single heirs have an advantage
If you don’t have joint heirs, you just need to clarify for yourself: can I keep the house after the cash flow and possible taxes drop, do I want to move in, rent it, renovate or sell it myself? Anyone who is determined to take over the inheritance must correct the land register and register as the new owner. In order to prove legal inheritance, an inheritance certificate is often required. This is available on request and for a fee from the probate court. The authorities or banks in particular require the document. The inheritance certificate is only a means of proving one’s inheritance right. If the deceased has made a notarial will, this is also sufficient for the land registry to proceed with the transfer. A simple will is not enough. Anyone who makes the correction within two years of the testator’s death and registers as the new owner pays no fees. Property transfer taxes are generally not due. In a community of heirs, it is possible as an individual heir to receive either a partial act of succession or a joint act of succession valid for several heirs. Important: Anyone who requests an inheritance certificate accepts inheritance at the same time. It is then no longer possible to refuse the inheritance.