Inheritance Law

Inheriting Property in Germany

Who can inherit a house in Germany?

According to German inheritance law, there are two types of heir: statutory heirs (gesetzliche Erben) and heirs designated in a will. Spouses and children typically constitute the primary group of legal heirs.

If there is no will, inheritance follows the rules of legal succession.

The law prioritises heirs as follows:

• Spouses: They are entitled to a share depending on the marital property regime.
• Children: Inherit equally and directly.
• Grandchildren: Only inherit if their parent (the deceased’s child) has already died.
• Parents, siblings and nieces/nephews inherit if there are no children or grandchildren.
• More distant relatives: Only in the absence of close relatives.

If there are no relatives, the state inherits the property.

Will vs. legal succession

In Germany, the transfer of a deceased person’s estate can occur in two ways: legal succession (gesetzliche Erbfolge) or via a will (Testament).

If the deceased did not leave a valid will or inheritance contract, their estate will be distributed according to the statutory rules set out in Sections 1924–1936 of the German Civil Code (Bürgerliches Gesetzbuch – BGB).

In contrast, a will enables individuals to specify their heirs and how their estate should be divided, thereby overriding the rules of statutory succession.

A will enables the testator to:

• Name specific heirs or exclude certain family members,
• Allocate specific assets (like a house) to certain individuals,
• Appoint an executor (Testamentsvollstrecker),
• Plan more complex distributions for blended families or business assets.

Foreign wills can be valid in Germany under the principles of international private law. This principle is codified in the EU Succession Regulation (EU 650/2012), which applies to cross-border inheritances within the EU. Under this regulation, the law of the country in which the deceased habitually resided usually governs the entire succession, unless the deceased has opted for the law of their nationality to apply.

Is it possible to refuse an inheritance of real estate?

Under German law, it is possible to refuse an inheritance (Ausschlagung der Erbschaft).

The heir must declare their refusal within six weeks of being informed of the inheritance, or within six months if they are living abroad.

Common reasons for refusing an inheritance of real estate include:

• The property has mortgages or debts
• The maintenance costs of the estate are unaffordable
• Expensive renovations are needed
• Legal disputes or liabilities tied to the deceased

If the inherited property has an outstanding mortgage, unpaid property taxes or is in poor condition, the heir could find themselves liable for all these costs. Mortgages are not erased upon death; they remain with the property and thus become the heir’s obligation.

In these cases, refusing the inheritance may protect the heir from these issues.

• Foreclosure proceedings
• Court claims from creditors
• Legal issues tied to the property

Therefore, refusing an inheritance is often an option exercised when the estate is burdened with debt.

This must be done in writing and officially registered at a probate court (Nachlassgericht) or through a German notary.

Succession with multiple heirs: how to manage the process

When a person passes away and leaves multiple heirs, those heirs do not immediately receive separate portions of the estate. Instead, they form a community of heirs (Erbengemeinschaft), which is governed by §§ 2032–2041 of the German Civil Code (Bürgerliches Gesetzbuch – BGB).

While this legal construct ensures that the estate is jointly managed and distributed, it also creates a number of challenges that must be addressed collaboratively. For example, disagreements often arise, particularly when one heir wants to sell the house and another does not​

Inheritance tax on real estate in Germany

Inheritance tax (Erbschaftsteuer) is levied on all inherited assets, including real estate.

The amount owed depends on the relationship to the deceased:

• Class I: Spouses and children – 7–30% rate
• Class II: Siblings, nieces/nephews, in-laws – 15–43% rate
• Class III: Unrelated individuals – 30–50% rate

Each class come with exemptions:

• Spouse: €500,000
• Child: €400,000
• Siblings, nieces/nephews and in-laws: €20,000
• Unrelated individuals: €20,000

The taxable amount is determined by the property’s market value at the time of death.

How to reduce inheritance tax: pay as little as possible

Inheritance tax in Germany can significantly reduce the value of an estate passed on to heirs, especially when real estate is involved.

However, German tax law (specifically the Erbschaftsteuer- und Schenkungsteuergesetz – ErbStG) offers several ways to optimise tax, particularly for close family members. With careful planning and the wise use of legal options, it is possible to minimise or even avoid this tax burden entirely.

Here are a few optimisation strategies:

• Use of the Inherited Property by the Spouse or Children: One of the most effective ways to reduce or eliminate inheritance tax on real estate is to live in the inherited home. According to § 13 Abs. 1 Nr. 4c ErbStG, the surviving spouse or registered partner can inherit the family home tax-free, regardless of its value. However, they must move into the property within six months of inheriting it and live in it continuously for at least 10 years. If these conditions are not met (e.g. if the house is sold or rented out during the ten-year period), the tax benefits will be revoked retroactively.
• Strategic Gifting During Lifetime (Schenkungen): Another powerful method of reducing tax is succession planning through lifetime gifts. Under § 16 ErbStG, the same tax-free allowances that apply to inheritances also apply to gifts, and these reset every 10 years. This means an individual can transfer substantial wealth tax-free by spacing out gifts over time. Incrementally gifting property during one’s lifetime (e.g. through usufruct arrangements – Nießbrauch) can preserve control over the asset while reducing the taxable estate.
• Residency and Tax Jurisdiction: The tax implications differ based on whether the deceased or the heir is a German tax resident. If either party was domiciled or habitually resident in Germany at the time of death, the entire worldwide estate is subject to German inheritance tax. However, if neither was a resident, only German-situs assets (such as German real estate) are taxed. In these cases, double taxation agreements (DTAs) between Germany and other countries may provide relief by avoiding duplicate taxation and enabling foreign tax credits.
• Valuation Challenges and Appeals: Inheritance tax is based on the market value of the property, as assessed by the tax office (Finanzamt). If you believe the valuation is too high, you can challenge it by submitting a qualified property appraisal from a certified expert. This could lead to a lower tax base and therefore reduced taxes. It is important to note that the tax is due within one month of receiving the assessment notice.

How to transfer inherited property: do you need a lawyer?

Transferring inherited real estate involves legal processes and is best handled with the assistance of a lawyer. First, the property must be officially registered in the heir’s name in the Grundbuch (land register).

The required steps include:

• Obtain an Erbschein (certificate of inheritance) or provide a notarized will.
• Apply for the registration change at the Grundbuchamt.
• Submit supporting documents (death certificate, ID, proof of inheritance).

When transferring inherited property, it is advisable to look for an inheritance law lawyer in Germany to ensure that all paperwork is accurate and submitted in a timely manner, thereby helping to avoid delays or legal errors.

How to resolve disputes between heirs legally

Disputes among heirs are one of the most common and emotionally charged aspects of the inheritance process.

Common causes of disputes among heirs are:

• Different expectations: One heir wants to keep the house, while another wants to sell it.
• Lack of agreement on property management: Decisions on repairs, rental or usage require unanimous approval.
• Unequal contributions or entitlements: Disputes may arise when one heir feels that another received or contributed more during the deceased’s lifetime.
• Emotional ties: Heirlooms or the family home may have sentimental value, which can complicate negotiations.

Until the estate is formally divided, all heirs are in a forced co-ownership situation, meaning they jointly own all parts of the estate, including property, bank accounts and personal items. No heir may act independently or claim specific assets without the consent of the others.

Decisions require unanimous agreement. If even one co-heir objects, actions such as selling or renting out the house cannot proceed.

This often leads heirs to seek legal mechanisms to break the deadlock or exit the community.

To resolve disputes, heirs may first seek an out-of-court resolution and then take legal action.

In an out-of-court resolution, an independent mediator helps the heirs find a solution that they can all agree on. This method is faster, less costly, and preserves family relationships. With or without the assistance of a lawyer or notary, the heirs can draft a division agreement (auseinandersetzungsvertrag) which specifies who gets what, how the property is managed or sold, and how the proceeds are shared.

If no agreement is possible, any co-heir may:

• Initiate a partition auction (Teilungsversteigerung) under § 180 ZVG (the Enforcement of Forced Sale and Administration Act). This forces the sale of the property through the courts, with the proceeds being split among the heirs. However, this often leads to financial losses and should be a last resort.
• File lawsuits to clarify testamentary intentions, enforce rights or claim compensation.

Litigation can be costly, slow and adversarial, so legal advice is essential. In complex or high-value estates, legal representation is essential to protect your interests and ensure compliance with inheritance and tax regulations.

Can an inherited house be sold? Procedure and taxes to be paid

Once ownership is legally transferred, an inherited property in Germany can be sold.

However, the sale of inherited real estate involves several steps and potential pitfalls, especially if multiple heirs are involved or if the property has increased in value since it was acquired by the deceased.

• Register as the owner in the land register (Grundbuch).
• Reach an agreement with the other heirs, if applicable.
• Determine whether taxes apply (inheritance tax or capital gains tax).
• Obtain a property appraisal to determine the fair market value.
• Engage a notary to draft and certify the purchase agreement.
• Transfer ownership and receive payment via the notary’s office.
• Settle any applicable taxes after the sale.

Before selling an inherited house, ensure that you are legally recognised as the property’s new owner.

The sale of an inherited house may trigger capital gains tax, commonly referred to as Spekulationssteuer, if the property is sold within a short timeframe of inheriting it. However, no tax is payable if the property was occupied by the deceased or the heir for at least two consecutive calendar years, or for one full year plus parts of the previous and following years, or if the 10-year holding period has expired.

Inheritance tax may also apply depending on the relationship between the deceased and the heir, as well as the property’s value.

Once the property has been sold, it will no longer benefit from certain exemptions, such as tax-free use by spouses or children, unless these conditions were met prior to the sale.

What happens to an inherited property after a divorce

In Germany, inherited property is generally considered to be separate and does not automatically form part of the division of marital property in the event of divorce. Under the standard matrimonial property regime, known as Zugewinngemeinschaft (community of accrued gains), each spouse retains ownership of what they brought into the marriage, including any inheritances received during the marriage. This means that inherited property usually remains with the heir and is not split between the spouses in the event of divorce.

However, the value of the inheritance can indirectly affect the financial settlement. During the division of marital property, each spouse’s net asset increase during the marriage is assessed and any gain is equalised. While the inherited property itself is excluded from the division, any increase in its value over time through renovation, appreciation or rental income may be factored into the overall financial calculation.

The situation can become more complex in cases where the inheritance has been used for shared purposes or combined with marital assets. It is therefore essential to seek legal advice to determine how the inherited property will be treated in your specific circumstances, particularly when marital property is being divided.

The importance of a lawyer in property inheritance matters

Inheriting property in Germany requires navigating the complex intersection of inheritance law, tax obligations and real estate regulations. Seeking the advice of a legal expert early on can help you avoid mistakes and secure your inheritance.

A lawyer can help you with the following:

• Ensure legal validity of wills
• Handle registration and official filings
• Avoid or resolve disputes
• Minimize tax burdens
• Facilitate property sale or transfer

If you are dealing with an inheritance, consult our inheritance and property law specialist at LSI Berlin to protect your interests and navigate the process smoothly.

Inherited property in Germany? Let us handle the legal side!

Inheriting property in Germany can present both opportunities and legal challenges.

Accepting an inheritance without knowing the estate’s financial situation, or failing to correctly register the property, could make you liable for debts, taxes or legal delays.

At LSI Berlin, we can help you navigate the entire inheritance process with confidence. Whether you need help understanding your obligations or managing an

Reach out now for expert legal assistance.

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