Inherited property? How to avoid arguments

Even without a will, many things seem at first glance clearly settled in the event of death: thanks to legal succession, the estate passes to the next of kin. But what seems like a formality can lead to divisions, especially if an asset is part of the inheritance and a community of heirs must come to an agreement.

Because unlike cash or shares, an apartment or house cannot simply be broken up and divided. If no will has been drawn up during your lifetime, the beneficiaries are registered together in the land register as a community of heirs – and must therefore make joint decisions about the future of the property.

However, this does not always go smoothly: for example, while one person prefers to sell, the other is attached to their parents' house. And a third would like to tear it down and build a new one. In the worst cases, the house remains empty for years while the people involved fight it out in court.

Community of heirs: important decisions must be unanimous

This is usually only straightforward to the extent that only one person – for example an only child – inherits the house from their parents. If there are several people, “there must be unanimity on most points”, explains Michael Bonefeld, a lawyer specializing in inheritance law in Munich. Not only does the property pass to the heirs, but also all the obligations: possible mortgages, property taxes, current electricity and gas costs, etc.

Unanimity is also necessary if a property is to be sold. For example, one of the heirs can take over the house and pay his co-heirs. But everyone has to agree. If the community of heirs does not succeed, a so-called partition auction is possible, which must be requested from the local court.

Sheet music auctions usually take two years or more

This is a mandatory auction type. It is important to note that only one community member is needed to start a split auction. And this also applies to other members of the community of heirs. Anyone interested can then bid, both strangers and co-heirs.

“Previously, split auctions were always an effective means of applying pressure, especially from the richest co-heir,” explains Bonefeld. But those days are over in the cities, where the highest prices are now also achieved at partition auctions.

However, the lawyer advises against this approach. This does not necessarily mean that the amount obtained can then be immediately distributed among the heirs. “Here too there are later conflicts.” Additionally, it often takes a long time; two years is the rule. It is therefore preferable to regularly sell a property by auction.

Inheritance taxes: only in a few cases can property be inherited tax-free

But it is not only an auction that can reduce an inheritance, but also the resulting tax. Depending on the relationship and the value of the property (which is based on the value of land in the region concerned), different tax classes and allowances apply. The Inheritance and Gift Tax Act (ErbStG) provides information on the multitude of constellations.

Only in a few cases can property be inherited tax-free. This applies, for example, if the parents' house is passed on to the children – but only if they then use the property themselves for ten years and it has no more than 200 square meters of living space.

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