Valuation of real estate in the estate, in case of donation or inheritance by authorities

Why the objection by a lawyer against the assessment is often worthwhile ? 
According to expert experience, the probability that the tax office will overestimate the value of a property from its desk is up to 80%. In individual cases, the value is then overestimated by up to more than 50% from the office. This is always done without any malicious intent on the part of the authorities.

Start with the asset value method without taking damage into account

Initially, the tax authorities use the asset value method. If an expert or private appraiser is commissioned, all damages and the equipment are recorded on site, which usually massively reduces the material value. Since the tax office does not usually send out field officers to investigate on behalf of taxpayers, damage to the property is initially left out of the equation. Equipment and structural condition can also be an issue in the valuation of real estate let for residential purposes abroad (EU and EEA).

Next act – the comparative value method is specified

The tax office often reacts after becoming aware of the damage and the thus considerably lower asset value by demanding an appraisal according to the comparative value method. However, this is often impracticable because the data in the official collection of purchase prices is anonymised, so that no-one can tell which previous purchase price related to which property and in which condition. The typical schematic application of average rental or standard land values does not enable the tax authorities to carry out an individual valuation.
Excessive charges according to the cost regulations (KostO) can also arise in judicial probate, donation, guardianship and care proceedings. For in many cases Rechtspfleger or cost officers will also make use of the collections of purchase prices in order to determine the costs of proceedings for the family, probate, guardianship or guardianship court.

Last act – low so-called common value

In many cases, property values set by the authorities have proven to be incorrect, so that it is appropriate to review the valuation(s) by means of a legal remedy – such as an objection to the tax authorities. It is not uncommon for the tax authorities to stubbornly stick to their view as long as no lawyer represents the interests of those affected. In many cases, the only method that will ultimately lead to the desired result is the asset value method in accordance with § 182 of the German Valuation Act (BewG). If the real (so-called common) value is demonstrably lower, this saves taxes completely legally. However, it requires one’s own initiative to engage an expert and, if necessary, a lawyer to enforce the claim. Only if there is a case of so-called official liability will an affected party be able to claim reimbursement of his expenses. Nevertheless, the tax savings or cost savings will be much higher, so that the commitment to a proper real estate valuation is economically worthwhile.
Dr. Johannes Fiala

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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