June 28, 2022 /
Anyone who inherits an apartment, a detached house or other real estate and land must pay inheritance tax. The exact amount of tax is calculated after deducting the tax-free amount, which in turn depends on the asset value and the degree of kinship of the heir(s) to the deceased. You can find all the important information on inheritance tax for real estate and what you need to bear in mind when calculating it here.
In principle, inheritance tax is always payable by the heir in Germany when the testator dies and the so-called acquisition by reason of death occurs. However, there are exceptions: for example, if the deceased’s wife lives in the inherited property for at least ten years after receiving the inheritance, no inheritance tax is due. This also applies to children, provided the home does not exceed 200 m² of living space.
In addition, inheritance tax is only payable if the value of the property is higher than the respective tax-free amount.
You can find the respective tax-free amount for inheritance tax in the following table:
| Degree of kinship / family relationship | Tax bracket | tax-free amount |
| Spouse | 1 | 500.000 € |
| Children, stepchildren | 1 | 400.000 € |
| Grandchildren | 1 | 200.000 € |
| Parents, foreparents | 1 | 100.000 € |
| Parents, previous parents (in the case of gifts) | 2 | 20.000 € |
| Divorced spouses, step-parents, nephews, nieces, siblings | 2 | 20.000 € |
| Other | 3 | 20.000 € |
After determining the tax-free amount, you must deduct this from the market value (= the sales price likely to be achieved on the market) of the property and you will receive the amount of inheritance tax as a result. The market value is calculated by the relevant tax office on the basis of the Property Valuation Ordinance(GrBewV). The decisive factor here is the date of death of the deceased. However, as the tax office’s calculation is only based on rough or standardized information and individual factors that reduce the value are not taken into account, the result is often an excessively high tax amount. You can avoid this by having a detailed market value appraisal carried out by an expert.
The tax rates to be levied for inheritance tax are set out in Section 19 ErbStG and are also listed here for ease of reference:
| Tax class 1 | Tax class 2 | Tax class 3 | |
| Up to € 75,000 | 7 % | 15 % | 30 % |
| Up to € 300,000 | 11 % | 20 % | 30 % |
| Up to € 600,000 | 15 % | 25 % | 30 % |
| Up to € 6 million | 19 % | 30 % | 30 % |
| Up to € 13 million | 23 % | 35 % | 50 % |
| Up to € 26 million | 27 % | 40 % | 50 % |
| Over € 26 million | 30 % | 43 % | 50 % |
A pension allowance can also be deducted from inheritance tax for real estate. In accordance with Section 17 ErbStG, this amounts to €256,000 for spouses and civil partners and between €10,300 and €52,000 for children and stepchildren, depending on their age. The widow’s or half-orphan’s pension is deducted from the pension allowance. It should also be noted how the testator has determined the succession for the property. If intestate succession applies, spouses, children and other relatives may have to share the inheritance. Inheritance tax is also divided between them.
The situation is different if the heir or heirs have been specified in the will or inheritance contract. In this case, the property goes to the beneficiaries and the inheritance tax is calculated as explained above.
Do you still have questions about inheritance tax for real estate? You can obtain professional legal advice on all aspects of inheritance law from the law firm Höchstetter & Koll.
Sources:
How inheritance tax is calculated for rental apartments (handelsblatt.de; last accessed on 25.06.2022)
Calculate market value for inheritance (heid-immobilienbewertung.de; last accessed on 25.06.2022)
Inheritance tax on real estate – how is the tax calculated? (vermietet.de; last accessed on 25.06.2022)
Inheritance tax: Allowances, amount & inheritance tax calculator (immoverkauf24.de; last accessed on 25.06.2022)
Inheritance tax on real estate: Calculating the tax-free amount & amount (immobilienscout24.de; last accessed on 24.06.2024)