Inheritance

When an apartment building is inherited, it is rarely just about property values. Behind every inheritance are personal relationships, emotions - and often conflicts. Especially in cities like Bremen, where apartment buildings remain in families for generations, a lack of clarity in the succession can quickly lead to financial and tax burdens. Early planning is therefore crucial in order to secure values and avoid disputes within the family.

Communities of heirs: Why they often become a burden

If an apartment building is bequeathed to several heirs, a community of heirs is automatically created. In practice, this structure often leads to problems:

• Disagreement about selling or letting

• Differing ideas about modernization or investments

• Blockades if a single heir prevents decisions from being made

• Risk of disputes that can escalate into partition auctions

Partition auctions are almost always disadvantageous from the owner's point of view:
The property is sold below market value - not infrequently 20-40% below the realizable price.

Tax pitfalls: When the tax office values differently than the market

Inheritance tax is a key aspect of real estate inheritance.

The decisive factor here is not the purchase price, but the taxable value, which is determined by the tax office in accordance with the Valuation Act. Particularly in sought-after Bremen districts such as Schwachhausen, Ostertor or Peterswerder, the tax values often differ significantly from the actual market value.

Important to know:

• An allowance of 400,000 euros applies for children

• For spouses 500,000 euros

• Anything above this is taxable

• The tax office can assess a value that is higher than the purchase price at the time

• If you do not check the valuation, you may pay too much tax

Owners can object to the valuation within one month and submit an expert report - a point that many people are unaware of.

Compulsory portion claims: the often underestimated financial burden

Even if an owner bequeaths an apartment building and prefers one heir, other relatives are entitled to the compulsory portion.
This can lead to considerable liquidity problems:

• Those entitled to a compulsory portion receive money immediately, not real estate

• The compulsory portion is based on the market value, not the economic capacity

• The heir may have to take out loans or even sell property

This can lead to financial difficulties, particularly in the case of rented apartment buildings.

The solution: Timely succession planning

Most of the conflicts that I deal with in practice do not arise intentionally -
but through a lack of planning.

The most sensible measures include

1. drawing up a will or inheritance contract

Saves disputes and provides clarity.

2. usufruct or right of residence

Allows the owner to retain income while the next generation becomes the owner.

3. consider transfer during your lifetime

Can be highly attractive from a tax perspective, especially if tax-free allowances are used optimally.

4. use company structures (e.g. family limited company)

Protects assets, facilitates administration and prevents fragmentation.

5. clear rules if there are several children

Who takes over the administration?
Who receives which compensation payments?
What happens in the event of disagreement?

A clear contractual arrangement prevents conflicts that become expensive later on.

Inheritances without preparation: typical scenarios from practice

Case 1: Dispute in the community of heirs

Three siblings inherit a house in Bremen's Neustadt district.
One wants to sell, two want to keep - result: months of standstill, loss of value, and finally a partition auction.

Case 2: Tax surprise

The tax office values a house in Schwachhausen at 1.4 million euros - the family had expected 900,000 euros. Several tens of thousands of euros in inheritance tax become due.

Case 3: Mandatory portion trap

One child inherits the house, two receive a compulsory portion - the payment forces them to sell, although the family actually wanted to avoid this.

Conclusion: Inheritance