Selling an Inherited house – Everything you need to know about selling an inherited house quickly and easy. “When can I sell an inherited house?”, our guide answers all your questions, including the many questions around one topic: taxes on the sale of an inherited house. Is the sale of an inherited house taxable? How is an inherited house taxed? How much is the inheritance tax for a house? Before the inherited house can be sold, it must first be decided whether the inheritance will be accepted at all. It should be noted that an inheritance can only be accepted as a whole. In other words, you inherit the land and property, but also the mortgage and any debts are accepted by the heir. Thus, not only rights, but also obligations are incumbent on the heirs. You have six weeks to decide for or against the inheritance. Within this period, it is necessary to work out whether it is financially worthwhile to accept the inheritance.
Selling an Inherited House – the First Steps
Whatever type of property you have to sell now after the inheritance: It depends on the location. When selling an apartment, selling a house, selling a plot and even more so when you are looking to sell multi-family houses. The location of your real estate is a decisive valuation factor. So is the substance and the equipment. Selling privately means accepting risks and making mistakes. From property valuation, contracts, taxes and costs.
In most cases the heirs decide on the inheritance: collect, administer or sell ?
Even if the property is located far from the heir’s place of residence. But in exactly this situation, the question arises what to do with the property. If neither inhabiting nor renting the house is possible, the most common consideration is to sell the inherited house.
- Reading tip: Sell or rent (external, FIV Magazine)
After a house is inherited, the first step for the heir is to go to the local court. There the certificate of inheritance can be applied for. This measure should also be taken if the heir only claims the compulsory portion. The certificate of inheritance identifies the heir as the rightful owner of the property.
The certificate of inheritance is issued by the probate court. The competent probate court is always the district court of the last residence under which the deceased was registered.
At the appointment at the probate court, the heir must prove his claim to the inheritance. This can be done through the public will, the inheritance contract or by proving the relationship with the accompanying legal succession.
The following documents must be brought by the heir to the probate court:
- The identity card
- The death certificate
- An affidavit regarding the correctness of the personal data
The probate court then issues the certificate of inheritance. This is either a sole certificate of inheritance, a community certificate of inheritance or a partial certificate of inheritance.
The sole certificate of inheritance is issued if there is only one heir. A joint certificate of inheritance is issued if there are several heirs. The certificate of partial inheritance shows that there are several heirs and that each of them receives a single inheritance.
The certificate of inheritance allows the heir to view the land register. Through this it can be found out whether the property is encumbered with land charges.
It should be noted that the issuing of the certificate of inheritance can be very expensive. These are based on the value of the inherited property at the time of the inheritance, less the debts of the deceased. In addition, the amount of the fees is based on the effort of the inheritance certificate procedure. For example, a fee of 300.00 Euros is due for an estate of up to 125,000 Euros. For an estate value of up to 500,000 Euro, a fee of 935.00 Euro is already due.
The extract from the land register is then corrected, as the heir is now the new owner of the property. In contrast to the conventional entry in the land register when buying a house, the entry in the land register for an heir is free of charge, provided that this is requested within two years after the death of the testator. Afterwards, the sale of the house can begin.
Selling an inherited house with several heirs
It is not unusual for a property to pass into the possession of several heirs. This is the case when several children inherit the house. This does not prevent the sale of the inherited property. The prerequisite for this is, of course, that the heirs are in agreement and all agree to the sale of the house. Verbal promises are not reliable here; instead, a clear legal situation is necessary.
Which costs are incurred when selling a house?
If the inherited house does not have to be renovated or a speculation tax is due, the costs are kept within a manageable range. Small cosmetic repairs will be due. Also proportional costs of the broker must be included. If the house is still burdened, a prepayment penalty for the mortgage is due.
Sell inherited house: Historical property
The sale of an old building or a listed property can prove to be more complicated. Often the speculation period causes heirs to suffer. If the property is sold within the period, the tax benefits that were originally granted by the status of the house are reclaimed.
In addition, the heir is obliged to preserve the property. If this does not happen, an order for maintenance can be issued by the monument protection authority. The resulting invoice will be forwarded to the heir. This results in very high costs, which the heir could have avoided.
What taxes are due on the sale of an inherited house ?
A land transfer tax is to be paid with every house sale. This is taken over by the buyer.
The inheritance tax itself is due with every inheritance, regardless of whether the house is sold or not.
It is therefore of primary importance for the heir whether an income tax is due. This is levied if the house is sold within the speculation period. The duration of the speculation period is ten years. The speculation period is not calculated from the time of inheritance, but from the time when the house was bought by the testator.
If this purchase is more than ten years ago, no taxes are due for the heir.
If the house is sold within the speculation period, the profit of the sale is taxable. This means that not the entire purchase price of the property is taxed, but only the increase in value of the house since the purchase. Thus the amount by which the proceeds of the sale are higher than the purchase price paid by the testator at that time is taxed.
You can find out the amount of this profit by deducting from the price that was sold for the property the acquisition costs, brokerage costs, notary’s fees and land transfer tax.
Whoever wants to sell an inherited house often exposes himself to a great deal of stress. It is therefore helpful to engage a competent estate agent who will take care of the sale of the house and take over all related tasks.
You are going to inherit a house? 8 tips for correct heirs of a property
You will inherit a house and are wondering what the next steps are for you? We present 8 aspects that you will have to deal with when inheriting a property.
How do I get my inheritance?
Ideally, the deceased has written a will and deposited it with a civil law notary. A will regulates (for example in the case of several children) who should inherit what. If there is no will, the legal succession applies. Spouse and children are first order heirs.
Check the estate
If an heir is accepted, this means accepting all rights, but also duties. If the inheritance is a pure monetary amount, this value is immediately determined. The situation is different with real estate. Not only does the house pass into the hands of the heir, but also any debts such as a mortgage are then accepted by the heir. This means in practice that the heir is liable for these debts with his own assets.
The heir therefore has a period of 6 weeks within which to decide whether to accept or reject the inheritance. This period begins on the day you learn of the inheritance. A glance at the land register reveals the financial situation of the estate. An estate agent is also able to determine the market value of the property.
The disclaimer of the inheritance takes place at the local court. Alternatively, the disclaimer can also be certified by a notary of your choice.
Do I need a certificate of inheritance?
The certificate of inheritance confirms the legality of the inheritance. Often the certificate of inheritance is necessary in order to receive the inheritance in the first place or to access the accounts of the deceased. The certificate of inheritance also entitles the heir to inspect the land register.
Are you the sole heir or co-heir of a community of heirs ?
In the case of a community of heirs, the inheritance does not go to a single person, but to several persons. This is the case, for example, if the testator leaves several children. The inherited house therefore belongs to all heirs. None of the co-heirs has a right to individual items of the inheritance. This means that all decisions concerning the inherited property must be made jointly by all heirs.
In a community of heirs, very different ideas about the property often clash, which can often lead to major conflicts. Many communities of heirs therefore decide together to sell the house and to divide the subsequent proceeds among themselves. This sale, in contrast to a partial auction, does not involve economic losses.
What should happen to the house?
Who will inherit or has already inherited a house, must deal in the second step with the question, what is to happen with the real estate. If the property is located in the heir’s place of residence and is also in a favorable location, it makes sense to live in the property yourself.
However, this option is not always possible. For example, if the heir already lives in his own house or the inherited house does not meet his own wishes and ideas.
The options then available to the heir are either renting the property or selling the house. Who considers letting must consider here that often numerous renovation work becomes due with the inherited house.
Which costs will come to me when I inherit a house?
The costs of inheriting a house are manageable. These are the application for the certificate of inheritance, the change in the land register and running costs.
The amount of the costs for the certificate of inheritance depends on the assets that are inherited. If the value of the inherited house is approximately 500,000 Euros, the costs due for the certificate of inheritance amount to approximately 935 Euros.
Running costs include, for example, incidental expenses and taxes. These can vary greatly from property to property and must be calculated individually.
Change of the entry in the land register
In the case of a normal house purchase, costs for the change of the land register entry become due. Not so if you inherit a house. In this case, you have a period of two years within which you can be registered free of charge as the owner of the property in the land register.
A certificate of inheritance is required to have the entry in the land register amended. You can obtain this from the probate court of the district court of the last place of residence under which the testator was registered.
Alternatively, a notarized will can be presented at the land registry. However, a simple will is not sufficient.
Calculate the inheritance tax
Who will inherit a house should calculate the amount of the inheritance tax as soon as possible. The law grants the heir a high tax allowance. For spouses in inheritance tax class I this is 500,000 euros. Children and grandchildren benefit from a tax allowance of 400,000 Euro.
Spouses in inheritance tax class I = 500,000 Euro
Children and grandchildren = 400.000 Euro
An inheritance tax is due if the remaining estate, after all liabilities have been calculated and deducted, is above the tax-free amount.
In inheritance tax class I, 7% inheritance tax is due after deduction of the tax-free amounts for a discount of up to 75,000 euros.
For a discount of up to 300,0000 euros, 11% inheritance tax is due.
You will inherit a house and would like to sell it? We are happy to assist you and advise you. Please contact us by telephone so that we can take care of your case.
Increase in value through conversion ?
An old property can be put to new use by a house conversion. Small rooms can be merged. Alternatively new rooms can be created. By extending the attic or the basement even new square meters can be gained. This opens up many possibilities for the current residents of the house, but can sometimes also be useful if you want to sell your house. Especially for old buildings with small rooms, a conversion can work wonders and attract more buyers. However, conversions involve a lot of effort and a high financial outlay. You should therefore only use it to increase the value of your property if your chances on the real estate market improve noticeably as a result.
- Selling a house and increasing its value: house renovation