Sale of an inherited property

Article Summary

When selling an inherited property, income tax is not automatically payable in every case. The decisive factor is mainly whether you inherited the property in the direct line, between spouses, or in the collateral line. The 5-year ownership period is also important, as it is used to assess the exemption from tax.

If the inheritance is in the direct line or between spouses, the 5-year period also includes the time during which the property was owned by the deceased person. In the case of inheritance in the collateral line, this period is not included, and the period starts only from the acquisition by the heir, meaning from the death of the deceased person. If the sale is not exempt from tax, the taxable amount is the difference between the sale price and provable expenses, especially the general value of the property stated in the inheritance decision.

When income tax is paid on the sale of an inherited property

When selling an inherited property, it is not true that the income is automatically “tax-free”. In practice, the decisive factors are mainly the relationship between the heir and the deceased person and whether, when assessing the exemption, the period of ownership of the deceased person is also included, or whether the 5-year period starts only from the acquisition by the heir.

How the law assesses the sale of an inherited property

The sale of real estate by an individual is usually assessed for income tax purposes as other income – income from the transfer of ownership of real estate.

The law also regulates the exemption for this type of income. In general, a 5-year period applies. However, in the case of inheritance in the direct line and between spouses, a special rule applies – the 5 years are assessed from the acquisition of the property by the deceased person and not only from the inheritance.

If the income is not exempt, it is taxed in the period in which it was received. The tax base consists of income reduced by provable expenses – in the case of inheritance, the key factor is the general value stated in the inheritance decision.

Direct and collateral line: how the 5 years are calculated

It is crucial to determine whether the inheritance is in the direct line (direct ancestor/descendant – for example parent, child, grandparent, grandchild) or in the collateral line (for example siblings, aunt/uncle, nephew and similar). This determines when the 5-year period begins:

• Direct line and spouses: the 5 years are assessed from the acquisition of the property by the deceased person.
• Collateral line: the period of ownership of the deceased person is not included; the 5 years are calculated from the acquisition by the heir, i.e. from the death of the deceased person and not from the registration in the Land Register.

In the case of a taxable sale, it is important to determine the expenses correctly – for an inherited property, this is usually the general value stated in the inheritance decision together with other provable costs related to the sale.

Taxable income from the sale also affects the annual health insurance reconciliation.

Practical checklist before selling an inherited property

Before signing the purchase agreement, we recommend checking the following points in particular:

• Is the inheritance in the direct or collateral line or between spouses?
• When did the deceased person acquire the property and when did the heir acquire it?
• Has it been correctly determined whether the income is exempt or taxable?
• Do you have the inheritance decision and documents supporting the general value?
• Can you prove related expenses such as an expert appraisal, fees, real estate agency commission, or legal services?
• Have you considered the impact on the tax return and possibly also on the annual health insurance reconciliation?

If you are not sure whether the income is exempt, we recommend carrying out the assessment before the sale – especially in the case of inheritance in the collateral line and when determining expenses such as the general value and provable costs.

Pay attention to dates: in the case of inheritance, ownership is acquired by the death of the deceased person, not only by registration in the Land Register.

Conclusion

When selling an inherited property, the decisive factor is whether the inheritance is in the direct or collateral line. In the direct line and between spouses, the period of ownership of the deceased person is also included for the purposes of exemption; in the collateral line, the 5 years are calculated only from the acquisition by the heir. If the exemption does not apply, the difference between income and expenses is taxed, especially the general value from the inheritance.

Do you need to verify whether the sale of your inherited property is exempt, or do you want to correctly set the expenses and tax return? We will gladly prepare an assessment for you according to the law, calculate the tax impact including the impact on health insurance, and help with the complete documentation for the transaction.

FAQ

Is tax paid on the sale of an inherited property?

Tax on the sale of an inherited property is not always paid. It depends on whether the income is exempt from tax. The decisive factors are mainly the family relationship to the deceased person and the fulfilment of the 5-year ownership period.

When is the sale of an inherited property exempt from tax?

The sale may be exempt from tax if the statutory 5-year period is met. In the case of inheritance in the direct line and between spouses, this period also includes the time during which the property was owned by the deceased person.

How is the 5-year period calculated in the case of inheritance in the direct line?

In the case of inheritance in the direct line, for example after a parent, grandparent, or child, the 5-year period is calculated from the moment when the property was acquired by the deceased person. This means that the heir does not have to own the property for another 5 years if the period had already been fulfilled by the deceased person.

How is the 5-year period calculated in the case of inheritance in the collateral line?

In the case of inheritance in the collateral line, for example after a sibling, aunt, uncle, or another relative outside the direct line, the period of ownership of the deceased person is not included. The 5-year period is calculated only from the acquisition of the property by the heir.

From what date is ownership of an inherited property calculated?

In the case of inheritance, ownership of the property is acquired by the death of the deceased person. Therefore, for tax assessment purposes, the decisive date is not only the date of registration in the Land Register.

What is taxed if the sale of an inherited property is not exempt from tax?

If the sale is not exempt from tax, the difference between the income from the sale and provable expenses is taxed. In the case of an inherited property, the general value stated in the inheritance decision is particularly important.

What expenses can I claim when selling an inherited property?

Expenses may include mainly the general value of the property stated in the inheritance decision and other provable costs related to the sale. These may include, for example, an expert appraisal, fees, real estate agency commission, or legal services.

Does the sale of an inherited property also affect health insurance?

Yes, if it is taxable income, the sale of an inherited property may also affect the annual health insurance reconciliation.

 

 

 

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