Real Estate Valuation Germany: Methods, Tax & Experts

Real Estate Valuation in Germany: Methods, Legal Basis, and Tax Relevance for Foreign Investors and Heirs

Real estate in Germany is valued under a statutory framework: the market value (Verkehrswert) is defined in § 194 BauGB and determined under the Real Estate Valuation Ordinance (ImmoWertV) using the comparative, income, or cost approach. For inheritance and gift tax, § 198 BewG allows taxpayers to prove a lower market value with a qualified expert report. For income tax depreciation, a separate rule applies: under § 7 (4) sentence 2 EStG, a shorter useful life must be proven to the tax office. For foreign investors and heirs, the correct valuation basis for each tax is decisive.

What Does “Market Value” Mean in Germany?

The market value of a property (Verkehrswert) is the price that would be achieved in an ordinary sale at the valuation date. Unusual or personal circumstances are disregarded. The definition is set out in § 194 BauGB.

A German valuation always refers to a specific valuation date (Wertermittlungsstichtag). For inheritance tax, this is the date of death. For a purchase decision, it is the current market situation.

The Three Valuation Methods under ImmoWertV

The ImmoWertV 2021, in force since 1 January 2022, standardizes the valuation process nationwide. It provides three methods. The valuer selects the method according to how the market prices the specific property type.

The comparative approach (Vergleichswertverfahren) relies on sales of comparable properties. The income approach (Ertragswertverfahren) capitalizes sustainable rental income. The cost approach (Sachwertverfahren) is based on replacement costs adjusted for age and market conditions.

The market data comes mainly from the local Gutachterausschuss. It publishes standard land values (Bodenrichtwerte), property yields, and market adjustment factors for its area.

Why Valuation Matters for Foreign Investors and Heirs

A valuation is relevant in four situations:

• Purchase: Asking prices are not market values. An independent valuation shows whether the price is supported by market data. Buyers also pay a real estate transfer tax of 3.5 % to 6.5 % depending on the federal state plus notary, land registry, and other incidental purchase costs.
• Inheritance and gift tax: The tax office calculates the value using standardized procedures under §§ 182 ff. BewG. The result can exceed the market value. Under § 198 BewG, which applies only to inheritance and gift tax, the taxpayer may prove a lower value with an expert report. Tax offices often arrive at higher values than the market supports, so a valuation report for the tax office can be worthwhile.
• Depreciation (AfA): § 7 EStG requires a split between land and building and, where applicable, proof of a shorter useful life. Both directly affect the annual tax deduction.
• Financing: Banks use the mortgage lending value (Beleihungswert), a conservative figure that is typically below the market value. The difference is explained in Beleihungswert oder Verkehrswert.

Depreciation (AfA) for Investors

Depreciation (AfA für Immobilien) is the main income tax lever for investors in rental property. Land is not depreciable. A purchase price allocation report splits the price between land and building, and only the building share is depreciated. Rental income from German property is generally taxable in Germany, including for investors living abroad.

The linear rates depend on the building category. “Other buildings” include residential buildings and non-residential buildings held as private assets.

If the actual useful life is shorter than the standard period (33, 50, or 40 years), depreciation can follow the shorter life under § 7 (4) sentence 2 EStG. The taxpayer must prove this to the tax office, usually with a remaining useful life report. While the declining-balance rate under § 7 (5a) EStG is used, a shorter useful life can only be considered after the switch to linear depreciation.

New rental housing may also qualify for special depreciation under § 7b EStG, subject to conditions, among them a building application before 1 October 2029. A tax adviser should confirm eligibility for each property.

Which Valuation Is Used for Which Purpose?

Inheritance Tax on German Property for Non-Residents

Real estate located in Germany is subject to German inheritance and gift tax even if neither the deceased nor the heir lives in Germany (limited tax liability, § 2 (1) no. 3 ErbStG). German nationals who have lived abroad for no more than five years remain subject to unlimited tax liability.

Since 25 June 2017, § 16 (2) ErbStG grants non-resident heirs the personal allowances of § 16 (1) ErbStG by law, regardless of their country of residence. The allowances are €500,000 for a spouse or registered partner, €400,000 for a child, €200,000 for a grandchild, €100,000 for other Class I persons, and €20,000 for all others.

The allowance is reduced in proportion to the assets not subject to German tax. The calculation compares the German assets with everything acquired from the same person within ten years. The former option to apply for unlimited tax liability under § 2 (3) ErbStG no longer exists. The change followed the ECJ ruling of 8 June 2016 in case C-479/14 (Hünnebeck).

Example: A child inherits a German apartment worth €300,000 and other assets worth €700,000 abroad from the same parent, with no further acquisitions within ten years. German assets represent 30% of the total, so 30% of the €400,000 allowance applies, which is €120,000.

Two reliefs are relevant for inherited real estate. Under § 13d ErbStG, buildings or parts of buildings let for residential purposes are valued at only 90% of their value. The discount applies automatically, does not apply to business assets, and related debts are deductible only in proportion (§ 10 (6) ErbStG). The saving is therefore smaller than 10% of the market value.

The exemption for a family home (Familienheim) under § 13 (1) nos. 4b and 4c ErbStG require that the deceased lived in the property and that the heir moves in without undue delay and uses it as their own residence for ten years. For children, only up to 200 m² of living space is exempt. Heirs who remain resident abroad generally cannot meet this condition. For them, the proportional allowance under § 16 (2) ErbStG and, where the tax office's value is too high, a valuation report under § 198 BewG are the main levers.

Whether foreign inheritance tax can be credited depends on the country of residence and on tax treaties. A tax adviser should review each case. Heirs who plan to sell an inherited house or want to understand the options for inheriting property tax-free should clarify the valuation basis first.

Who Is Qualified to Value Property in Germany?

The title “Sachverständiger” is not generally protected. Three qualification routes are recognized in practice:

• Gutachterausschuss: the independent municipal valuation committee, which issues reports on request.
• Publicly appointed and sworn expert: appointed by a chamber, for example the IHK.
• Certified expert: certified under DIN EN ISO/IEC 17024 by an accredited body such as DIAZert.

Whether a publicly appointed or a certified valuer is the better choice depends on the purpose and on the authority involved. An overview of valuers recognised by authorities supports the decision.

TEGoVA Recognized European Valuer (REV) is a European qualification that complements these routes. André Schiffer of Schiffer & Partner Immobilienbewertung holds the Diplom-Sachverständiger (DIA) title, the DIAZert certification under DIN EN ISO/IEC 17024 and the REV recognition.

How a Valuation Process Works

1. Define purpose and valuation date. The purpose determines the type of value and the report format.
2. Collect documents. These include a current land register extract, floor plans, building permits, the energy certificate and rental agreements.
3. Inspect the property. The valuer records condition, fit-out, defects and use.
4. Analyse the market and select the method. Comparable data and the Gutachterausschuss figures are evaluated.
5. Prepare the report. The report documents all assumptions so that tax offices and courts can verify them.

Official proceedings in Germany are conducted in German. Reports for tax offices and courts are therefore usually prepared in German.

Frequently Asked Questions

How is real estate valued in Germany?

Real estate is valued under the Real Estate Valuation Ordinance (ImmoWertV) using the comparative, income, or cost approach. The method is chosen according to the property type and how the market prices it. The result is the market value (Verkehrswert) as defined in § 194 BauGB, related to a specific valuation date.

What is the difference between market value and tax value?

The market value reflects the price achievable in an ordinary sale. The tax value for inheritance and gift tax is calculated by the tax office using standardized procedures under §§ 182 ff. BewG and can be higher. Under § 198 BewG, the taxpayer may prove a lower market value with a qualified expert report.

Do non-residents pay German inheritance tax on property located in Germany?

Yes. Real estate located in Germany is subject to German inheritance and gift tax even if neither the deceased nor the heir lives in Germany. Since 25 June 2017, non-resident heirs receive the personal allowances of § 16 (1) ErbStG by law, reduced in proportion to the assets not subject to German tax (§ 16 (2) ErbStG). The former option to apply for unlimited tax liability under § 2 (3) ErbStG no longer exists.

Which valuers do German tax offices accept?

For proof of a lower value under § 198 BewG, tax offices accept reports from the local Gutachterausschuss and from qualified valuers. In practice, these are publicly appointed and sworn experts and experts certified under DIN EN ISO/IEC 17024. Acceptance depends on the proven qualification and a report that follows the ImmoWertV methods.

Are there inheritance tax reliefs for inherited property in Germany?

Two reliefs are relevant. Residential property let at the date of death is valued at 90% under § 13d ErbStG. A family home is exempt under § 13 (1) nos. 4b and 4c ErbStG only if the heir lives in it for ten years, which heirs resident abroad generally cannot meet.

Which law governs the proof of a shorter useful life for depreciation?

The proof of a shorter actual useful life for building depreciation is governed by § 7 (4) sentence 2 EStG, not by § 198 BewG. Section 198 BewG applies only to inheritance and gift tax. Both procedures require a qualified expert report, but they rest on different tax laws.

Conclusion

Property valuation in Germany is rule-based: § 194 BauGB defines the value and the ImmoWertV defines the methods. For inheritance and gift tax, § 198 BewG defines the route to prove a lower value. For depreciation, § 7 (4) sentence 2 EStG governs the proof of a shorter useful life. Foreign investors and heirs should clarify the purpose and the valuation date first, because both determine which report is needed. Questions can be directed to Schiffer & Partner Immobilienbewertung via the contact page or by phone at +49 211 879 786 60. Valuation reports are prepared as Verkehrswertgutachten for single properties and as Portfoliobewertung for larger holdings.

Über die Autoren: Bundesweite Expertise

Schiffer & Partner Immobilienbewertung steht für eine Immobilienbewertung, die Präzision mit tiefer Marktkenntnis vereint. Als ISO 17024 zertifizierte Sachverständige sind wir bundesweit im Einsatz und in den unterschiedlichen Mikro-Märkten Deutschlands zu Hause. Wir verstehen die feinen Nuancen der Wertermittlung – vom historischen Altbau über moderne Bürokomplexe bis hin zu weitläufigen Wohngebieten im Speckgürtel der Metropolen.

Unsere Gutachten sind das Ergebnis kontinuierlicher Marktbeobachtung und höchster Qualitätsstandards. Wir liefern Ihnen die rechtssichere Basis für Ihre Immobilienentscheidung:

• Verkehrswertgutachten: Rechtssichere Wertermittlung für Finanzämter, Gerichte und Verkäufe nach § 194 BauGB.
• Restnutzungsdauergutachten: Zur Maximierung der steuerlichen AfA beim Finanzamt.
• Kaufpreisaufteilungen: Präzise Trennung von Boden- und Gebäudewert zur steuerlichen Optimierung der Anschaffungskosten.
• Gutachtenüberprüfung: Qualifizierte Zweitmeinung (Second Opinion) zur fachlichen Prüfung von Fremdgutachten bei Streitfällen.
• Portfoliobewertungen: Strategische Wertermittlung ganzer Immobilienbestände für institutionelle Kunden und Fonds.
• Wohnflächenberechnungen: Rechtssichere Flächenermittlung nach WoFlV als verlässliche Basis für Mietverträge und Verkauf.
• Genehmigungsprüfung: Fachmännische Überprüfung der baurechtlichen Zulässigkeit und Dokumentation des Objektbestands.

Unabhängig, zertifiziert und tief im Markt verwurzelt – wir liefern Klarheit für Ihre Werte.