Anyone who inherits a property and wants to sell it often fears a high speculation tax on the profit from the sale. The good news: In many cases, none is due at all. What matters is not when you inherited the property, but when the deceased originally purchased it. We explain how the so-called step-in-the-shoes theory works, when your sale remains tax-free, and how to calculate a potentially taxable profit.
Speculation Tax or Inheritance Tax? The Important Difference
Two completely different taxes may be relevant when dealing with an inherited house – and it is worth keeping them clearly separate:
- Inheritance tax is due because you inherit something at all. It depends on the value of the estate and your relationship to the deceased; spouses and children have high tax-free allowances. It has nothing to do with a later sale.
- Speculation tax is not a separate type of tax, but income tax on the profit from a private sale transaction under Section 23 EStG. It can only arise if you sell the inherited property – and even then only under certain conditions.
Important: The inheritance itself is neither a purchase nor a sale. Simply inheriting a property therefore never triggers speculation tax. The question only arises when you resell the inherited property. That is precisely what this guide is about.
The Step-in-the-Shoes Theory: You Inherit the Deceased’s Period
A speculation period of ten years applies to plots of land, houses, and condominiums. If you sell a property at a profit within ten years of its acquisition, the profit is generally taxable. After the ten-year period has expired, however, the profit is tax-free.
For an inherited property, however, this period does not start over upon the inheritance. As heir, you succeed to the deceased’s legal position by universal succession (Section 1922 BGB). For tax purposes, Section 23(1) EStG expressly provides that, in the case of an acquisition without consideration, the individual successor is attributed “the acquisition … by the legal predecessor.” Experts refer to the step-in-the-shoes theory: You step into the deceased’s shoes and take over their purchase date as well as its acquisition costs.
An example: Your mother bought an apartment in June 2012 and subsequently rented it out. After her death, you inherit the apartment in 2025 and sell it in 2026. For calculating the period, the purchase in 2012 is decisive—the time between the acquisition by the deceased and your sale is around 14 years. The ten-year period expired long ago, so the gain remains fully tax-free.
The situation is different if the deceased purchased the property shortly before their death: If your father acquired a rented condominium in September 2020 and you sell it as the heir in 2026, only around six years have passed since the acquisition. The period is still running—the sales gain would be taxable unless the owner-occupation exception applies.
When the sale remains tax-free
Two routes mean that no speculation tax is incurred when selling an inherited property:
- The ten-year period has expired. If the deceased purchased the property more than ten years before your sale, the gain is fully tax-free—regardless of its amount.
- The property was used for the owner’s own residential purposes. Under Section 23 (1) No. 1 sentence 3 EStG, the sale is also tax-free within the ten-year period if the property was used either continuously for the owner’s own residential purposes since its acquisition or exclusively for such purposes in the year of sale and the two preceding years.
Owner-occupation is particularly important in inheritance cases. Here too, universal succession is helpful: If the deceased lived in the property themselves until their death, this owner-occupation is generally attributed to you. If you sell soon after the inheritance, the exception therefore usually applies even if you never lived in the house yourself. If, on the other hand, you move in yourself after the inheritance, your own use counts.
A note: The owner-occupation exception is always examined on a case-by-case basis. If the property remains vacant for an extended period between the death and the sale, consulting a tax adviser is advisable.
How to calculate the taxable gain
If the period has not yet expired and no owner-occupation exception applies, only the actual gain is taxed—not the entire sale price. Calculate it as follows:
- Sale price (the sale price notarized in the purchase agreement)
- minus the deceased’s acquisition costs, including the ancillary costs at the time, such as real estate transfer tax, notary fees and land register fees
- minus Disposal costs incurred when selling, such as for advertisements, the energy performance certificate or proportional notary fees
- = taxable profit
For a previously rented property, one detail is added: The depreciation (AfA) claimed during the rental period reduces the acquisition costs and thus increases the taxable profit (§ 23 para. 3 EStG).
The profit calculated in this way is added to your other income and taxed at your personal income tax rate – depending on income, up to 42 or 45 percent, plus the solidarity surcharge and, where applicable, church tax. There is no fixed “speculation tax rate.”
One small exception remains: If your total profit from private sales transactions in the calendar year is below 1,000 euros, it remains tax-free (exemption threshold under § 23 para. 3 EStG, increased from 600 to 1,000 euros in 2024). If the threshold is exceeded, however, the entire profit is taxable.
Calculation example: Your father bought a rented apartment in 2020 for 220,000 euros (including ancillary costs). You inherit it and sell it in 2026 for 300,000 euros; the sale incurs costs of 5,000 euros. The profit is 300,000 − 220,000 − 5,000 = 75,000 euros (for simplicity, we leave the AfA out of consideration). At a tax rate of 42 percent, this would amount to around 31,500 euros in tax. If your father had bought the same apartment as early as 2012, the sale would, by contrast, be completely tax-free.
Advantages and disadvantages: sell immediately or wait until the deadline?
If the ten-year period has not yet expired, you often have a choice: sell immediately or wait until the period expires. Both options have their justification:
- Advantage of selling immediately: You obtain liquidity quickly, avoid ongoing costs (property tax, insurance, maintenance) and spare yourself the administration – a frequent motive, especially in a community of heirs.
- Advantage of waiting: If the period is about to expire, a little patience can save the entire speculation tax. Establishing owner-occupation can also make the sale tax-free.
- Disadvantage of selling immediately: Within the period and without owner-occupation, the profit is taxed in full – this can quickly cost five-figure amounts.
- Disadvantage of waiting: You continue to bear the ongoing costs and market risk. If prices fall, a lower sale price can eliminate the tax advantage again.
Whether waiting is worthwhile depends on the remaining period until the The outcome depends on the deadline, the expected profit, and your tax rate. As soon as the tax situation has been clarified, TraumImmo will help you assess the realistic market value and advertise your property with extensive reach.
FAQ on the Speculation Tax on Inherited Properties
Does inheriting itself trigger speculation tax?
No. Inheritance is not a sale transaction. Speculation tax can only arise when you sell the inherited property—and even then only within the ten-year period and without personal use. This question is completely independent of inheritance tax.
When does the ten-year period begin for an inherited property?
On the day the deceased originally purchased the property—the decisive document is the notarized purchase agreement. Inheritance does not start a new period. This is the essence of the step-into-the-shoes principle under Section 23 (1) of the German Income Tax Act (EStG).
The deceased lived there themselves—do I still have to pay?
As a rule, no. If the deceased occupied the property themselves in the year of sale and the two preceding years, the sale is tax-free under the personal-use exemption. This use is generally attributed to you as the heir. If the property was vacant for an extended period before the sale, you should have the individual case reviewed.
How high is the speculation tax?
There is no fixed rate. The profit is taxed at your personal income tax rate, i.e. up to 42 or 45 percent, plus the solidarity surcharge. If your total profit from private sales transactions during the year remains below 1,000 euros, no tax is due.
What applies in the case of a community of heirs?
Each co-heir is considered individually for their share; the step-into-the-shoes principle and the deadlines apply equally to everyone. If the community sells jointly after the deadline has expired, the profit remains tax-free for everyone. The sale of individual inheritance shares may be treated differently for tax purposes—professional advice is advisable here.
Conclusion: The sale usually remains tax-free
Whether speculation tax is due when selling an inherited property depends on the deceased’s purchase date, not on the inheritance. If the deceased acquired it more than ten years ago or the property was occupied by the owner until recently, you will generally sell it tax-free. Only if the deceased purchased it shortly before their death and the property was rented out will the profit be relevant for tax purposes. Therefore, first check the original purchase date—and consult For larger amounts, consult a tax advisor. This way, you will know where you stand even before the sale.