Real Estate Transfer Tax and Costs for the correction of the Land Register in the Event of an Inheritance Settlement

In the case of an inheritance, the question of possibly accruing taxes and other costs is a major concern for many heirs. Often, the decedent's substantial assets are invested in real estate assets, so liquidity problems may arise in paying these taxes and costs.   Do I have to pay real estate transfer tax? And what about the costs für the correction of the land register?

No incurrence of real estate transfer tax

Once real estate is included in the estate, the question of whether a real estate transfer tax is due arises when inheritances are dispersed. If the real estate is sold and the proceeds are paid out to the co-heirs in proportion to their inheritance quotas, this question does not arise. However, if one or more of the co-heirs wishes to take over the real estate, it must be clarified whether real estate transfer tax is due on this transaction.

According to § 3 No. 3 S. 1 GrEStG, the acquisition of a property belonging to the estate by co-heirs is exempt from real estate transfer tax when the estate is divided up. This also applies if intermediate steps still take place. If, for example, the community of heirs is first dissolved and then the co-ownership shares in the property are transferred to the other co-heirs, this still constitutes a uniform process of inheritance division. In this case, no real estate transfer tax is due. (FG Münster, Case No. 8 K 809/18 GrE).

Heirs who receive land or co-ownership shares in land as part of the inheritance division do not have to pay land transfer tax. However, if they subsequently wish to exchange their co-ownership shares, this no longer takes place as part of the inheritance settlement, so that they must pay land transfer tax for this exchange transaction (FG Rheinland-Pfalz, Case No. 4 K 1380/13).

As soon as companies are involved, several particularities have to be considered. Please ask us about this in the course of a consultation.

No costs for the correction of the land register within two years

The heirs are obliged to keep the land register up to date and to have the community of heirs or the actual heirs of the property entered in the land register in place of the decedent after the inheritance settlement. If this procedure is carried out within two years after the occurrence of the succession, it is free of charge (GNotKG Kostenverzeichnis Nr. 14110 Ziff. 2 Abs. 1). The submission of the application to the land registry is sufficient for the two-year period. At this point in time, not all documents required for the execution of the land register correction must be available. Certificates of inheritance and other evidence may be submitted subsequently. The two-year time limit also applies to predecessor and successor heirs, who can each take advantage of the fee exemption. Those who receive real estate by virtue of an advance legacy can also take advantage of the fee exemption. 

If a spouse becomes the sole owner after the death of his/her spouse, he/she must have the land register corrected, even if the surviving spouse is already in the land register. This is important in the event of a later sale of the property or for the registration of a mortgage, where the land register must show the current ownership. After many years, it can be difficult to find or obtain all the necessary documents. 

Do you have questions about community of heirs and land transfer tax? We will be happy to advise you and work with you to find the solution that meets your wishes and is the most cost-effective for you. We will be happy to draw your attention to possible costs and deadlines as part of the consultation. 


Katharina Kutter

As an attorney for family and inheritance law and have specialised in advising companies and high net worth individuals in the areas of asset succession, asset division, tax law and family law retirement planning – with a particular focus on cross-border matters. 

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