Inherited property? How to determine market value and save inheritance tax
After a bereavement, an important question often arises: What is the inherited house or apartment worth? The market value not only determines the amount of inheritance tax – it is also the basis for fair payments to co-heirs or a later sale.
The most important facts at a glance
| The Problem | The Solution |
|---|---|
| The tax office often values properties 20-50% too high | A professional appraisal can correct the value |
| Higher value = more inheritance tax | Lower proven value = less tax |
| Disputes in communities of heirs | Objective valuation creates clarity |
Since January 2023 the tax office tends to value properties even higher under the new Valuation Act. Your own market value appraisal is now more worthwhile than ever.
Why market value is so important for an inheritance
The market value (also "fair value") indicates what price a property would achieve on the open market. In an inheritance situation, this value is indispensable in several situations:
Note the reference date
The date of death of the testator is always decisive. The market value must be determined as of this date – even if the valuation takes place months later.
Who determines property value? Tax Office vs. Appraiser
There are two ways the market value is determined – with very different results:
| Criterion | Tax Office | Independent Appraiser |
|---|---|---|
| On-site inspection | No | Yes |
| Considers defects | Hardly | Completely |
| Modernization backlog | Ignored | Value-reducing |
| Individual factors | Standard calculation | Property-specific |
| Basis | Standard land values + standard procedure | Market data + 3 valuation methods |
| Typical result | Often 20-50% too high | Market-appropriate value |
| Costs | Free | From approx. €2,500-3,000 |
| Recognition | Automatic | Must be submitted |
"The tax office doesn't know your house. It doesn't see the leaky basement, the outdated heating, or the renovation backlog. All these factors significantly reduce market value – but only if you prove them."— Max Example, Real Estate Appraiser
Inheritance tax allowances: What you can inherit tax-free
Not every inheritance automatically triggers tax payments. The legislator grants different allowances depending on the degree of relationship:
| Degree of Relationship | Allowance | Tax Class |
|---|---|---|
| Spouse / registered life partner | 500.000 € | I |
| Children, stepchildren, adopted children | 400.000 € | I |
| Grandchildren (parents deceased) | 400.000 € | I |
| Grandchildren (parents alive) | 200.000 € | I |
| Parents, grandparents | 100.000 € | I |
| Siblings, nieces, nephews | 20.000 € | II |
| Step-parents, parents-in-law | 20.000 € | II |
| Divorced spouse | 20.000 € | II |
| All other persons | 20.000 € | III |
Special case: Owner-occupied property
Spouses can inherit the family home completely tax-free – without size restrictions. Children inherit up to 200 m² tax-free if they live in it themselves for at least 10 years.
How high is inheritance tax really
The tax rate depends on two factors: your tax class and the value above the allowance.
| Value above allowance | Cl. I | Cl. II | Cl. III |
|---|---|---|---|
| Up to €75,000 | 7% | 15% | 30% |
| Up to €300,000 | 11% | 20% | 30% |
| Up to €600,000 | 15% | 25% | 30% |
| Up to €6,000,000 | 19% | 30% | 30% |
| Up to €13,000,000 | 23% | 35% | 50% |
| Up to €26,000,000 | 27% | 40% | 50% |
| Over €26,000,000 | 30% | 43% | 50% |
Caution with tax classes II and III
From the first euro above the low allowance of €20,000, siblings, nephews, or friends pay at least 15-30% tax!
Example calculation: How the tax office calculates your inheritance tax
Scenario: Marie inherits her grandmother's single-family house. She doesn't plan to move in herself.
Tax Office Valuation
With Appraisal
Savings through appraisal: €11,000
The costs for a market value appraisal (approx. €2,500-3,500) have more than tripled in this case.
Interactive Inheritance Tax Calculator
Enter your property value and degree of relationship.
Don't know the value yet? Get free estimate
The 3 recognized methods for market value determination
Depending on the type of property, appraisers use different valuation methods:
1. Comparison Value
Comparison with recently sold, similar properties in the region. Considered the most market-oriented method.
2. Income Value
Calculation based on sustainably achievable rental income. The return determines the value.
3. Asset Value
What would it cost to rebuild the building today? Minus age-related depreciation and defects.
Important
A professional appraiser applies at least two methods and weighs the results. The tax office often uses only one standard method without on-site inspection.
How to legally reduce inheritance tax
Strategy 1: Your own market value appraisal
The tax office must accept a qualified appraisal if it was prepared by a publicly appointed and sworn expert (§ 198 BewG).
Checklist: When is an appraisal worthwhile?
- The property has obvious defects (renovation backlog, outdated technology)
- The market value is likely to exceed your allowance
- It involves a community of heirs with potential for conflict
- The property has special value-reducing features (noise, contamination, right of way)
- You don't plan to sell soon (otherwise the purchase price can serve as proof)
Strategy 2: Use the 10-year rule
Spouses and children can inherit the property tax-free if they:
- Live in it themselves for at least 10 years
- Use the property as their main residence
- (For children: max. 200 m² living space)
Strategy 3: Deduct appraisal costs
You can deduct the costs of the market value appraisal from the taxable inheritance. This also reduces the tax base.
Determine the value of your inherited property now
Whether for tax returns, paying out co-heirs, or a planned sale – with a well-founded valuation, you make the right decision.
Start free property valuation →Special case community of heirs: Why market value is particularly important here
If several people jointly inherit a property, a community of heirs is created. Typical scenarios:
- One person wants to keep the house: Payment to co-heirs based on fair amounts.
- Everyone wants to sell: Joint sale needs basis for minimum price.
- Disagreement: Partition auction, court sets minimum bid.
- Dispute about the value: Neutral appraisal creates binding agreement.
Tip: As a community of heirs, agree together on an appraiser. This creates acceptance for the result and prevents each heir from commissioning their own appraisal.
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