Continuously rising real estate prices are not only driving up costs for buyers, but are also increasingly burdening heirs with high tax demands. Particularly in large cities like Munich, where real estate prices have practically exploded in recent years, heirs often find themselves in financial difficulties. The high value of inherited properties means that descendants suddenly have to pay substantial sums to the tax authorities.
One example of this is Wolfgang D., who inherited an apartment building in Munich from his parents in 2017. What was once purchased for around one million Deutsche Marks now has a market value of several million euros. However, the enormous value of the building pushed Wolfgang to his financial limits. ” Without the support of a tax advisor, I wouldn’t have been able to manage it, ” he says, looking back. In addition to the responsibility for the property, he suddenly found himself confronted with a heavy tax burden.
Inheritance tax poses a significant challenge for many families. The statutory allowances are often insufficient to cover the true value of real estate in expensive regions. The allowance for children is €400,000, while spouses can inherit up to €500,000 tax-free. However, for amounts exceeding these limits, the tax authorities levy taxes of up to 30 percent.
How can heirs circumvent tax hurdles?
To reduce the financial burden, there are several strategies that heirs can consider. Transferring assets early through lifetime gifts is one of the most effective methods. Furthermore, foundations offer an attractive way to protect larger fortunes in the long term while also taking advantage of tax benefits.
Experts strongly advise consulting a tax advisor or specialist lawyer early on. They can develop tailored solutions to reduce the tax burden. In some cases, it may be advisable to sell a property in advance and divide the proceeds. Alternatively, partial transfers to heirs can be considered to spread the tax burden over several years.
One particularly effective approach is to utilize the ten-year rule. Within this period, assets can be transferred tax-free up to the amount of the respective tax-free allowances. ” Such gifts at regular intervals can significantly reduce the tax burden ,” explains lawyer Cocron.
Money-saving tips for inheritance matters
To avoid having to sell an inherited property, timely planning is crucial. Lawyer Cocron advises making gifts in stages and drawing up a will early on. ” This should be updated regularly to ensure it reflects current life circumstances and wishes .”
Another important aspect is the heirs’ own use of the property. Those who live in an inherited property themselves for at least ten years can generally benefit from significant tax breaks. This not only preserves the family’s assets but also noticeably reduces the financial burden.
” Through careful planning and early action, heirs can avoid tax traps and preserve family assets. The topic of inheritance should not be postponed – those who address it early have the best chance of avoiding unnecessary costs, ” continued attorney Cocron.
