Inherit real estate correctly
The division of assets, and this includes a condominium, for example, should ideally be arranged by the testator during his or her lifetime, advises Dr. Markus Kaspar, a notary in Vienna.
Many Austrians are owners of real estate. What actually happens to apartments, houses and land when the owner dies?
If there is no will, the real estate is subject to intestate succession like everything else. This also applies if the will is invalid, the heirs renounce the inheritance or are already deceased. Or, if the will does not concern all of the deceased’s inheritable property.
What does that mean in concrete terms?
In the statutory order of succession, a certain group of persons is defined as legal heirs: These are the spouse or registered partner and children or their descendants. If they are not present, parents, siblings or nieces and nephews of the deceased are included. If these do not exist either, then grandparents or their descendants and finally the great-grandparents are entitled to inherit.
Are persons who are related by marriage to the deceased also entitled to inherit?
These have no legal right of inheritance.
And what about cohabitants?
Since the 2017 inheritance law reform, cohabitants have an extraordinary right of inheritance if there is no will. This means that the inheritance goes to them and no longer to the state – but only if there really are no legal heirs.
What about the shares?
Children inherit two thirds, spouses or registered partners one third.
Thus, if someone owns a house and an apartment alone, does the surviving (spouse) partner and/or the children inherit it jointly?
That’s right. Whereas in the case of a condominium, it should be noted that only a maximum of two people can become owners. If there are several heirs, an agreement must be made as to what happens to the apartment.
This can get tricky, such as when one heir wants to sell and another doesn’t….
This case is actually not so rare. For this reason, we always advise discussing the distribution of assets with the heirs while they are still alive and clearly regulating it in a will. And assets do not mean millions, they also include a small condominium.
So if you provide in a will that one child alone inherits the property, does that mean that the other children or the surviving partner get nothing?
No, no one goes away empty-handed; the right to a compulsory portion ensures that. Each of the children – but also each spouse and registered partner – is entitled to a compulsory portion. That is, in this case, they must be paid out by the person who inherits the property. Incidentally, parents and grandparents of the deceased are no longer entitled to a compulsory share.
What is the amount that must be paid out?
The basis is the market value of the property less any debts.
But this can be for a financial burden….
Therefore, the fulfillment of the claim to a compulsory portion can be deferred for up to five years, or even ten years with the approval of the court, if the payment would cause an heir to lose his or her home, for example.
I would like to come back to cohabitants: So surviving cohabitants have to move out of the apartment they lived in with their partner if his or her child inherits it?
Yes, and within one year of the partner’s death. Unless they have been granted a life-long gratuitous right of residence in their wills. Or both sides will otherwise find an arrangement. Incidentally, the surviving spouse also has the right under the “advance bequest” to live in the property until his or her death.
There is also the possibility of an owner partnership for condominiums – would that be a solution?
In this case, two natural persons – irrespective of their marriage certificate or other relationship to each other – are joint owners of an apartment. If one of the two dies, his share becomes the property of the other. However, if there are other heirs, a so-called takeover price must be paid into the estate.
Speaking of costs, what are the costs of inheriting a property?
Although there is no inheritance tax in Austria, real estate transfer tax is incurred when a property is inherited. The tax rate for property values up to 250,000 euros is 0.5 percent, for the next 150,000 it is two percent and for everything above that it is 3.5 percent. In addition, there is the land registry registration fee of 1.1 percent of three times the unit value.
Do you have any other tips in connection with inheriting real estate?
When it comes to wills, you should not rely on form templates from the Internet, but consult experts. On the one hand, there are formal requirements; if these are not observed, the will is invalid. On the other hand, some phrases that you choose as a layperson may mean something different legally than intended. For example, the sentence that after the death of the spouse everything is inherited by the children can be interpreted as ordering a succession. In this case, the wife would be allowed to use but not consume the assets.
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