Congratulations. A distant aunt has left you an apartment block. What may seem like a wonderful gift at first glance can quickly turn into a challenge. This is because the inheritance brings with it not only opportunities, but also a number of pitfalls. We’ll show you the five most common mistakes and how to avoid them, so that your block of flats becomes a source of profit rather than a burden.
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Unlock content Accept the required service and unlock contentError 1: Unclear ownership
As we all know, you cannot choose your family. That is precisely why it is crucial to clarify ownership arrangements clearly from the outset. If there is a will, many matters are clearly settled. If there is no will, the probate court determines how the estate is to be divided in accordance with the Civil Code.
A specialist solicitor in inheritance law is worth their weight in gold in such situations. They will not only help you to assert your claims, but also assist you in drawing up an agreement on the distribution of the estate. This agreement clearly and transparently documents the ownership arrangements. In addition, they will check whether there are any outstanding debts or whether third parties – such as those with a right of residence – have any claims to the property.
Mistake 2: Not knowing the exact value of the house
Before you consider selling or letting out your property, you need to know what your block of flats is actually worth. Online calculators or portals that display comparative values can provide an initial guide. It is also helpful to look at current rental prices in your neighbourhood.
However, this data is no substitute for a professional valuation. A valuer or experienced estate agent can identify hidden opportunities or risks. Perhaps the roof needs renovating at a cost of 50,000 euros, or your property is situated right on the edge of a nature reserve, which increases its value. Only with a professional valuation can you determine the realistic market value.
Mistake 3: Underestimating taxes and costs
An apartment block brings not only income but also obligations. Anyone who miscalculates here is in for some nasty surprises. Inheritance tax is particularly important.
The amount depends on the degree of kinship and the value of the property. Children currently have an exemption of 400,000 euros, whilst siblings have only 20,000. Anything above this is taxed at up to 50 per cent, depending on the tax bracket. On top of this come running costs such as maintenance (10 to 20 euros per square metre per year), insurance and any necessary modernisation work.
A tax adviser can help you find legal ways to minimise your tax burden, for example through owner-occupation or targeted depreciation allowances.
Mistake 4: Not making a clear decision between selling and letting
If you try to do both at once, you’ll often end up going nowhere. You should therefore decide early on whether you want to sell the block of flats or keep it.
If your financial situation suggests you should hold on to the property, ensure you have professional property management and, if necessary, rent default insurance. This way, you’ll benefit from stable rental income in the long term.
If, on the other hand, you need cash quickly or the property is not in a prime location, selling is the better option. Make sure you choose an estate agent with experience in the multi-family housing sector. This is the only way to get the best price.
Mistake 5: Starting out without professionals
Many families shy away from the costs of solicitors, tax advisers or experienced estate agents. Yet, relative to the value of a multi-family property – which often amounts to several hundred thousand euros – these expenses are minimal. Professional guidance protects you from disputes, tax pitfalls and poor decisions, which can quickly cost you five- or even six-figure sums.
A specialist estate agent will also recognise your property’s potential and match it with the right buyers. Working with professionals from the outset saves time, spares you stress and maximises your return.
Conclusion
An inherited block of flats can be a wonderful opportunity – if you go about it the right way. Clarify the ownership situation, have the property’s value professionally assessed, don’t forget about taxes and running costs, make a clear decision and ensure you have the right partners by your side.
Then your inheritance will not become a problem, but a solid foundation for your financial future.
