Outgrowth of the real estate boom: The inherited family home is becoming expensive

Real estate prices are constantly rising, especially in large cities. As a result of this development, inheriting the parental home is becoming a problem for many people. A growing number of families are affected who are not high earners.

Real estate prices are becoming increasingly stiff, particularly in large cities. This development is also making inheriting the parental home a problem for many people. A growing number of families are affected who are not high earners.

In view of the rapidly increasing real estate prices, inheriting the parental home is becoming a heavy financial burden for many citizens due to the high tax burden – and for a growing number it is unaffordable. This is reported by the Bavarian Ministry of Finance, owner associations and individual homeowners. A growing number of families who are not high earners will be affected by the development. Bavaria's Finance Minister Albert Füracker (CSU) is demanding that the federal government both increase tax allowances and regionalize inheritance tax.

It is by no means just about luxury properties in what have always been expensive villa settlements such as Hamburg-Blankenese or the Munich suburb of Grünwald. "Many of our settlers built their houses after the war, often on very large plots of land," reports Beatrice Wächter, managing director of the homeowners' association in Bavaria. "In the meantime, after the death of their parents, some of the children can no longer keep the houses because the inheritance tax is so high."

Homeowners with inheritance problems cannot hope for much sympathy from less well-off tenants. However, the phenomenon is believed to be accelerating the trend towards displacement of established residents, as well as the rise in rents. However, there are no exact dates. In the main, property developers, investors and the state benefit in the form of higher tax revenues. "These are exactly the cases in which large new buildings are built on these properties: apartment buildings, semi-detached houses, whatever," says Wächter. "The problem does not only exist in Munich, but in all larger cities and now also in the surrounding area."

From the point of view of the parliamentary group leader of the left in the Bundestag, Amira Mohamed Ali, "it must be ensured that people who inherit the house of their parents do not get into financial difficulties and are certainly not worse off than people who use tax tricks to lose their assets Treasury can inherit". However, anyone who inherits larger real estate assets "can certainly be expected to help finance the community through inheritance tax," she emphasized.

CSU politician Füracker demands that "an inheritance tax reform is urgently needed": "The family home must be able to remain the family home. If children have to sell their parents' home because they cannot afford the inheritance tax, we cannot accept that."

Since 2009, real estate prices in metropolitan areas such as Munich have doubled or tripled in some cases. "However, the personal allowances have not been adjusted for 13 years. The relief effect of the allowances is therefore hardly available," says Füracker. "There is a risk that in the long term more and more investors will buy and rent real estate, especially in popular regions," says the CSU politician.

Revenue from inheritance tax goes to the states

Even families in some rural areas are affected by the development: farmers in the outskirts of metropolises or people whose parental homes are located on a beautiful lake. The income from the inheritance tax goes to the federal states. That's why Bavaria is calling for regionalization, so that each state government could set the amount of the tax itself.

Because an old house with a large plot of land in a big city like Frankfurt, Munich, on Lake Starnberg or on the Elbe just outside Hamburg is now worth many millions. If the descendants do not live in the parental home themselves, but elsewhere, the allowance per child is 400,000 euros. And given the development of real estate prices, that is tight.

The development can be seen at least indirectly from the development of income. The Bavarian state government collected 2.5 billion euros in inheritance tax, in 2009 it was less than a billion. According to the ministry, the jump is mainly due to the ever-increasing real estate prices.

An example from Munich: Wolf Armin von Reitzenstein, a retired high school teacher, lives in a prime location in the Neuhausen-Nymphenburg district in a listed property built by his step-grandfather in 1907. "A neighboring property was recently sold for 12 million euros," says Reitzenstein.

This was bad news for the family: "The sales cases in the immediate vicinity alone influence the standard land value and thus allow unrealized paper property values to rise to astronomical heights," says Sibylle Barent, head of the tax and financial policy department at the Haus&Grund owners' association in Berlin. "In the case of inheritance tax, the tax office assumes the achievable rent, not the rent actually collected."

Depending on the age and where the children live, the inheritance tax will be significantly higher than it would cost to buy an entire house in a less popular rural area.

"My children could probably not pay the inheritance tax," says Reitzenstein. "Many long-established families can't keep their houses under these circumstances. There is so much money on the market right now that is looking for investment. Then the houses go to investors who wait for value to rise and rents to increase."

Reitzenstein doesn't want to sell, but wants to keep his property for the family. "I resist the tax office taxing it as if I wanted to sell it," says the classicist. "I'm fighting for the valuation to be based on the income and not on the market value. Especially with listed buildings, the costs often significantly exceed the income." © dpa