Community of heirs despite partial sales
March 20, 2022 | 60,00 EUR | answered by Steuerberater Knut Christiansen
Situation: 11 apartments, all with active mortgages up to the roof, inheritance community with 4 children, inheritance tax is unlikely to be incurred. Unfortunately, only some of the apartments can be sold directly (10-year deadline met), even if no one wants to rent them out. Can the heirs divide the successive sales among themselves without restrictions and harmlessly each by ¼ and jointly regulate the rental, annuities, and possible investments, so that each only pays taxes on their own share? Or is a real division absolutely necessary and if so, do compensation payments among themselves trigger a new "holding period" of 10 years? Thank you and best regards
Good evening and thank you for using ask-a-tax-expert.com!
Regarding your question, I would like to provide the following feedback.
The community of heirs can be maintained until all properties have been (ideally) sold tax-free. In this regard, the community of heirs must submit an annual declaration and declare the rental income. The taxable shares will then be determined separately by the tax office and communicated to the respective tax office of each heir. The shares of the heirs (1/4) will then be taxed through the income tax returns of each heir. Any payments can then be distributed by the community of heirs to the co-heirs.
It is advisable to avoid a division in kind, as this ultimately involves a commercial transaction (similar to an exchange). In this case, the heirs would each generate new acquisition transactions, triggering a new 10-year period.
I hope this answers your question, if not, please feel free to reach out again.
Please note that this forum cannot replace personal advice. Incomplete or inaccurate information can alter the legal outcome.
Best regards!
Knut Christiansen
Tax advisor
