Inherited half a property?

Real estate ownership: what should heirs do now?

The key point: anyone currently inheriting a property jointly with others should check whether a valuation discount might apply in their case. In addition, the co-heir should ensure that the notice from the tax office regarding the valuation of their co-ownership share remains open. “This means filing an objection to the notice and referring to the ruling of the Münster Fiscal Court from November 24, 2022,” says Lindauer. However, an appeal against the ruling has been filed, so the Federal Fiscal Court must make the final decision. Until then, this process could take several years.

Why is there a valuation discount?

The local appraisal committee introduced the 20 percent discount on co-ownership shares. A partial heir had commissioned the appraisers to review the assessed property value set by the Valuation Act. According to Section 198 of the Valuation Act, heirs can use an appraisal to demonstrate a lower market value.

The plaintiff argued that the inherited property was worth less than the amount determined by the tax office. The Münster Appraisal Committee agreed—and even went a step further: the experts not only set a lower overall market value for the property but also applied the 20 percent discount to the heir’s 50 percent fractional ownership. This makes a notable difference. For example: if two heirs inherit a multi-family building valued at €800,000, the Münster interpretation would set each co-owner’s share at €320,000 instead of €400,000.

Is co-owner decision-making power limited?

The committee determined the discount based on experiences from market transactions and foreclosures. As justification for why a discount is justified, the committee cited the significant risks associated with a co-ownership share—such as limited control over the property. However, the Münster tax office did not agree with this assessment. “That’s why the case went to the Münster Fiscal Court,” explains Jürgen Lindauer. “The court ruled in favor of the co-heir and their appraisal but allowed an appeal. Now, the decision rests with the Federal Fiscal Court.”