The goal of this guide is to provide structured support after the final inheritance of a property. This guide assumes that you have already accepted the inheritance, filed the tax notification, corrected the land register (Grundbuch), and clarified the necessity of a certificate of inheritance (Erbschein).
Scenario 1: the property is currently rented
Upon inheritance, you automatically assume the role of the landlord (§ 1922 BGB in conjunction with § 566 BGB). Since existing lease agreements continue automatically, all landlord responsibilities fall to you.
Your options for a rented property include: remaining a landlord, terminating the lease for personal use (Eigenbedarf), selling the property as a rented unit, or negotiating a termination agreement with a severance payment.
Remaining a Landlord
While legally the simplest path, it involves significant effort. You must inform the tenant in writing of the change in ownership. You must also take over the security deposit from the estate; it must be kept in a dedicated account, protected against insolvency and separate from your private assets (banks offer specific “Mietkautionskonten” for this). Next, you must take over all existing contracts (e.g., insurance, property management, maintenance) and issue a SEPA mandate for the homeowners’ association (WEG) fees.
Termination for Personal Use (Eigenbedarf)
This is often the most difficult path. For a termination to be valid:
- The person moving in must be specifically named and usually belong to the inner family circle. Uncles, aunts, cousins, or foster children are considered borderline cases.
- You must provide a specific, verifiable reason. Vague claims are insufficient.
- There must be a sincere intent to use the property. If you terminate the lease but do not move in or sell the unit instead, you risk damages in the tens of thousands of euros.
- The notice must be in writing with a handwritten signature (email or fax is invalid).
- Notice periods: 3 months (rented < 5 years), 6 months (5–8 years), 9 months (over 8 years).
- Restriction Period: In Munich, a 10-year “blocking period” applies if a multi-family house was converted into individual condominiums during the tenancy (§ 577a BGB).
Selling a Rented Property
This is often faster than termination, but you should expect a lower price compared to a vacant property. Note the tenant’s right of first refusal (Vorkaufsrecht) if the unit was converted into a condo during their tenancy.
Termination Agreement with Severance
You agree on a payout for the tenant to move out. In Munich, these sums vary wildly—from three months’ rent to over €20,000. This is often worth it for old leases with sub-market rents or if the tenant’s presence significantly lowers the sale price.
Scenario 2: The Property is Vacant
You can move in yourself, rent it out, or sell it.
Personal Use (Owner-Occupation)
If you wish to live in the region, this saves on lifetime rent. You may also benefit from the “Family Home Exemption” (Familienheim-Befreiung), which can fully exempt you from inheritance tax under these conditions:
- Eligible Persons: Spouses/registered partners (no size limit). Children/grandchildren (tax-free up to 200 m²; anything above is taxed proportionally). Siblings or unmarried partners are not eligible.
- Prior Use: The deceased must have lived there until death (unless prevented by compelling reasons, like nursing care). Rented properties do not qualify.
- Immediate Move-in: You must move in “without delay” (usually within 6 months).
- 10-Year Rule: You must live there for 10 years. If you move out or sell earlier, the tax exemption is revoked retroactively.
Note: Close relatives have tax-free allowances (Freibeträge). If the total estate value is below these limits, no inheritance tax is due regardless. Furthermore, Speculation Tax is waived after 3 years of self-use (specifically: living there across two “turn-of-the-years,” e.g., Dec 2024 to Jan 2026).
Renting out
Renting provides passive income, especially for communities of heirs (Erbengemeinschaft).
Professional Help: Property managers usually cost between 3–10% of the cold rent but handle all daily burdens.
- Deductions: You can offset expenses against tax, including depreciation (AfA), mortgage interest, maintenance, property taxes, and management fees.
- Strategic Renting: You can rent the property to reach the 10-year holding period required to avoid speculation tax on a future sale.
- Duties: You must provide utility statements, an energy certificate, ensure building safety, and comply with the “Rent Brake” (Mietpreisbremse). We recommend staying updated on the 2026 Tenancy Law Reform.
- Professional Help: Property managers usually cost between 3–10% of the cold rent but handle all daily burdens.
Selling
Renting provides passive income, especially for communities of heirs (Erbengemeinschaft).
If you sell, the Speculation Tax is key. It is calculated on the profit:
Sale price – (original cost + incidental costs + modernization) – selling costs
This profit is taxed at your personal income tax rate. The tax is waived if:
- The property was owned (by you and the deceased combined) for more than 10 years.
- You met the “self-use” requirements mentioned above.
Selling can be done privately (saving the ~3.57% commission) or via an agent. Due to the high administrative effort in Munich (document retrieval, viewings, negotiations), many heirs prefer using a professional agent despite the costs.
Disclaimer: This guide provides basic knowledge but does not replace individual legal or tax advice. For specific questions, please consult a specialist.
Optimo Homes is a property management firm based in Munich. We specialize in the full management of inherited residential properties for owners residing in Germany and abroad.