Anyone in Düsseldorf or the rest of NRW who inherits a house or apartment and wishes to sell it faces two tax questions: does inheriting trigger inheritance tax (Erbschaftsteuer), and does the later sale trigger speculation tax (Spekulationssteuer)? The two taxes follow entirely different rules. The good news: in many cases the sale of an inherited property is income-tax-free, because the ten-year speculation period has already expired thanks to the so-called step-into-the-shoes principle (Fußstapfentheorie). This guide explains clearly which taxes apply when, what exemptions exist, and what communities of heirs (Erbengemeinschaften) should bear in mind. This is general information, not individual tax advice.
Two taxes, two moments: inheritance tax and speculation tax
When it comes to taxes around an inherited property, two completely different things are often mixed up. In reality there are two separate types of tax at two different moments.
- Inheritance tax (Erbschaftsteuer) arises at the moment of the inheritance, that is, when you inherit the property. It is based on the value of the inherited assets and the degree of kinship to the deceased.
- Speculation tax (Spekulationssteuer) (income tax on a private disposal transaction under § 23 EStG) can arise later when the property is sold, if a profit is made and certain time limits are not observed.
Both taxes can apply or not apply independently of each other. It is therefore possible that inheritance tax is due on the inheritance, while the later sale remains entirely tax-free. Conversely, a property may pass free of inheritance tax but trigger speculation tax on a quick sale. Those who clearly separate the two levels avoid costly misjudgements.
Inheritance tax: allowances by degree of kinship
Whether inheritance tax is due at all when you inherit depends above all on the personal allowances (Freibeträge). These are set out in § 16 ErbStG and depend on the relationship to the deceased. Only the value exceeding the allowance is taxed.
- Spouses and registered civil partners: 500.000 Euro
- Children (and children of children who have already died): 400.000 Euro per child
- Grandchildren: 200.000 Euro
- Parents and grandparents in the case of acquisition on death: 100.000 Euro
- Siblings, nieces, nephews and unrelated persons: 20.000 Euro
The value of the property is determined according to the rules of the German valuation law (Bewertungsgesetz) and added to the rest of the inherited assets. Especially in sought-after locations such as Düsseldorf, Meerbusch or Neuss, property values can exceed the allowances. If the taxable acquisition is above the allowance, a graduated tax rate applies depending on the tax class and the amount. A careful, market-appropriate valuation is therefore important from the outset, because a value set too high can cost unnecessary inheritance tax.
Family-home exemption: when the property is owner-occupied
For owner-occupied properties there is a special relief: the tax exemption for the so-called family home (Familienheim) under § 13 ErbStG. It can completely exempt the acquisition from inheritance tax, but is tied to strict conditions.
- Spouses and civil partners (§ 13 Abs. 1 Nr. 4b ErbStG): the family home remains tax-free if the deceased lived in it until the inheritance and the surviving partner moves in without delay. There is no floor-space limit here.
- Children and grandchildren of deceased children (§ 13 Abs. 1 Nr. 4c ErbStG): here too the deceased must have lived there until the end and the child must move in without delay. However, only the living space up to 200 square metres remains tax-free; a larger portion is taxed proportionally.
Decisive is the ten-year tie-in: anyone who no longer occupies the family home themselves within ten years of acquisition, for example because they sell or rent it out, loses the exemption retroactively. The inheritance tax is then levied afterwards. Exceptions apply only for compelling reasons, for example proven need for care. Anyone wishing to sell a tax-free inherited family home in the short term should definitely check this consequence beforehand.
Speculation tax and the step-into-the-shoes principle
At the sale it gets interesting. A profit from selling a private property is only taxable under § 23 EStG if no more than ten years lie between acquisition and sale. An inheritance itself, however, is not an acquisition, because it is gratuitous.
This is where the step-into-the-shoes principle (Fußstapfentheorie) applies: under § 23 Abs. 1 Satz 3 EStG, in the case of gratuitous acquisition the deceased's acquisition is attributed to the heir. You therefore step, for tax purposes, into the shoes of the deceased. What matters is thus not the inheritance, but the day on which the deceased once bought the property. Their original acquisition costs also continue to apply.
The practical consequence is welcome: if the deceased acquired the house more than ten years ago, the speculation period has already expired, and the sale remains income-tax-free. Since properties are often in family ownership for decades, this is precisely the normal case. Only if the deceased themselves bought recently can speculation tax still arise on a quick resale. What is then taxed is the profit, that is, the difference between the sale price and the deceased's original acquisition costs including incidental costs, less the income-related expenses. If the total profit from private disposal transactions in the calendar year stays below 1.000 Euro, no tax is due.
Tax-free through owner-occupation
Even if the ten-year period is still running, the sale can be tax-free. § 23 Abs. 1 Satz 1 Nr. 1 Satz 3 EStG exempts from speculation tax properties that were used for one's own residential purposes.
There are two variants: either the property was occupied exclusively by the owner throughout the entire period between acquisition and sale, or it was used by the owner in the year of the sale and the two preceding years. For the second variant, around two and a half calendar years of continuous owner-occupation spread over three years is therefore sufficient.
This exception also applies to inherited properties. Owner-occupation by the deceased can be taken into account here as well. If the deceased lived in the house themselves until the end and the heir sells in the short term, the sale can thereby remain income-tax-free. Important is the distinction from the family-home exemption for inheritance tax: these are two different rules, each with its own requirements. Mere renting out of the property does not count as owner-occupation and therefore does not protect against speculation tax.
Selling from a community of heirs
If several people inherit together, a community of heirs (Erbengemeinschaft) arises. Selling the property is often the practical way to divide the estate, because money is easier to distribute than the house itself. For tax purposes, each co-heir is considered individually.
For speculation tax, the step-into-the-shoes principle applies here too: what matters is the deceased's date of acquisition, and equally so for every co-heir. If the ten-year period has expired, the sale remains income-tax-free for everyone. For inheritance tax, each co-heir is entitled to their own personal allowance.
An important special case: if a co-heir buys out the others' shares in order to take over the property alone, this purchase of shares is for consideration and thus an acquisition within the meaning of § 23 EStG. A new ten-year period begins for the additionally purchased share. If this co-heir sells later, the purchased part may be taxable, while the inherited part continues to follow the deceased's time limits. In Düsseldorf and the surrounding area, where properties reach high values, a clear, coordinated sales roadmap is worthwhile for communities of heirs, avoiding disputes and keeping deadlines in view.
Process and typical mistakes when selling
An orderly process saves heirs a great deal of effort. This sequence makes sense:
- Clarify ownership and have the land register corrected (certificate of inheritance or notarised will).
- In a community of heirs, find a common line on the sale.
- Have the market value determined realistically.
- Check the tax situation: when did the deceased buy, is the speculation period still running, is owner-occupation an option?
- Prepare and carry out the sale in a structured way.
Common mistakes are: confusing the two types of tax; not knowing the deceased's original date of purchase, even though it determines tax exemption; selling a tax-free inherited family home within the ten-year tie-in and thereby retroactively triggering the inheritance tax; and losing old purchase documents, receipts for modernisations and incidental costs that could reduce the taxable profit.
Richter Immobilien-Transaktionen accompanies heirs in Düsseldorf and throughout NRW discreetly, from a fair, market-appropriate valuation to a smooth sale. Through a network grown over decades with more than 20.000 contacts, we reach suitable prospective buyers, on request also in a confidential off-market sale. Detailed tax questions are best clarified additionally with your own tax adviser.
