Use inherited property yourself: Tax advantages and important steps
Spouses or registered partners who inherit a property from their deceased partner and live in it themselves are generally exempt from inheritance tax. However, you must use the property yourself for at least ten years and may not rent it out during this period. Exceptions apply in the event of a necessary move to a care home. However, different rules apply for children and other heirs Tax regulations.
Inherit alone or be part of a community of heirs?
Whether you inherit the property alone or share it with other relatives makes a big difference. In the case of a community of heirs, all co-heirs must decide together how the inherited house or flat is to be used. If you want to move in yourself, there are basically two options:
- Conclude a rental agreement: You move in as a tenant and agree a rent with the community of heirs.
- Pay out co-heirs: You acquire the property in full by paying out the co-heirs on a pro rata basis. This requires a well-founded valuation.
Valuation and financing
Have the value of the inherited property determined by an independent expert or experienced estate agent. This value serves as the basis for the payment to the co-heirs. In order to raise the required sum, you can mortgage the inherited property or an existing property.
Refurbishment measures before moving in
Most inherited properties are no longer up to date. Modernisation of the roof, windows or heating system may be necessary. In addition, the floor plans of older houses often no longer meet today's living standards. Open-plan concepts are popular, which often necessitates the demolition of walls, the installation of steel beams and the remodelling of windows and entrances. The garden can also be redesigned to make it attractive again.
Conclusion: Preparation is everything
Using an inherited property independently can be financially and fiscally rewarding. However, this requires careful planning - from the valuation and financing to any necessary renovations.
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Robert Schüßler
Property valuer (EIA and IHK)
