Inheriting Real Estate in Estonia: What You Need to Know and What to Consider

Real estate inheritance is an important life stage that can come unexpectedly and raise questions. If you have learned that you are inheriting real estate or want to plan your estate in advance, it is important to understand all the nuances of the process. The inheritance process may seem complicated, but with the right knowledge you can get through it smoothly. This article provides an overview of the legal foundations of real estate inheritance and practical steps in Estonia that apply from 2025 onwards.

Grounds for Inheritance Rights in Estonia

In Estonia, inheritance is regulated by the Inheritance Act, which determines the order and rules of inheritance. The law ensures that property passes on correctly and fairly. Inheritance occurs in two ways:

Statutory Inheritance

If the testator has not made a will, the property passes according to the law. This is like inheritance's autopilot – the law determines the exact order of who inherits and how much. The order of heirs is:

1. First order - the testator's lineal descendants (children, grandchildren)

2. Second order - the testator's parents and their lineal descendants (siblings)

3. Third order - the testator's grandparents and their lineal descendants

Think of inheritance like concentric circles – the closest relatives inherit first, then more distant ones. The spouse inherits depending on which other heirs are present. In statutory inheritance, the spouse typically receives at least 1/4 of the estate.

Testamentary Inheritance

If the testator has made a will, the property is inherited on the terms specified in it. A will is like a personal roadmap for distributing property – it allows you to determine the fate of your property according to your wishes, but must take into account the requirements of mandatory shares (closest relatives who are entitled to receive a certain portion of the estate).

A will provides the opportunity to assign specific real estate to specific people to whom you wish to bequeath them. For example, you can leave a cottage to a grandchild who enjoyed summers there as a child, or an apartment to a relative in need of assistance.

Initiating the Inheritance Procedure

The inheritance procedure begins after the death of the testator and to carry it out you need to:

1. Contact a notary - the procedure is conducted by a notary in whose jurisdiction the testator had their last place of residence

2. Submit the necessary documents - death certificate, documents proving the identity of heirs, will (if it exists)

3. Identification of heirs by the notary - the notary checks for the existence of a will and identifies the legal heirs

Attention! As of 2025, the inheritance procedure has become more digital, allowing documents to be submitted electronically. This significantly accelerates the entire process. For example, you can now submit an inheritance application through the e-notary system without having to visit a notary's office in person.

Special Features of Real Estate Inheritance

When inheriting real property, the following special features must be considered:

Certificate of Inheritance

To transfer ownership of real property, a certificate of inheritance is required, which is issued by the notary after completion of the inheritance procedure. The certificate of inheritance is the basis for changing the land register entry. This document is like a key that opens the way to further actions with the real estate – without it you cannot officially register the property in your name.

Registration in the Land Register

Based on the certificate of inheritance, an application must be submitted to the land registry office for re-registration of ownership. This is an important step that officially confirms the transfer of real estate to the heir. If you have inherited real estate but fail to register it in the land register, it can create legal problems in the future and complicate, for example, a later sale.

Joint Inheritance

If there are multiple heirs, joint ownership of the real estate arises. All decisions regarding the use, sale or encumbrance of the property must be made jointly. In the absence of cooperation, real estate sales can become difficult.

Imagine a situation where three siblings inherit their parents' house. One wants to sell the house, another wants to live there, and the third wants to rent it out. Without a clear agreement, a stalemate develops, which can end in a court case. That is why it is wise to agree in advance on how to manage real estate held in joint ownership.

Tax Obligations When Inheriting Real Estate in 2025

When inheriting real estate, tax obligations must be taken into account:

1. Income tax on sale - if inherited real estate is sold, income tax liability may arise on the profit

2. Tax exemptions - a tax exemption applies if:

   • The inherited real estate was the testator's residence and the heir uses it as their residence until sale

   • It is property returned during land reform (applies to certain conditions)

As of 2025, it is important to know that the tax exemption for the sale of property returned during land reform does not automatically extend to heirs. This means that if you inherit such property and decide to sell it, there may be a tax liability.

Example: If you inherit an apartment from your grandmother that was returned to her during land reform, and decide to sell it, you should be aware that the tax exemption does not automatically transfer to you. Therefore, it would be advisable to consult with a tax specialist before selling to avoid unexpected tax obligations.

Practical Steps in Real Estate Inheritance

1. Consult with a Specialist

Before initiating the inheritance procedure, it is worth consulting with a notary or an experienced real estate agent who can explain the process and offer the best solution. Professional advice can help you avoid mistakes that may prove costly later.

2. Gather the Necessary Documents

To initiate the inheritance procedure, you need:

• Death certificate of the testator

• Documents proving the identity of heirs

• Will (if it exists)

• Documents proving ownership rights to real estate

Organizing documents early speeds up the entire process. The sooner you can submit them to the notary, the sooner you can get the certificate of inheritance.

3. Acceptance or Renunciation of the Inheritance

In Estonia, an inheritance is automatically deemed accepted unless the heir renounces it within three months of becoming aware of their inheritance rights. Renouncing an inheritance may be prudent if the estate has significant debts.

Real-life example: An heir learned that he was inheriting an apartment, but the apartment had over 50,000 euros in outstanding loans and maintenance and utility debts. Since the market value of the apartment was lower than the debts, he decided to renounce the inheritance to avoid taking on debt obligations.

4. Payment of Debts

Before disposing of the property, it is important to identify the testator's debts and obligations. The heir is liable for the testator's debts up to the value of the inherited property. This means that if the inherited property has debts, they must be paid from the estate before the real estate can be freely disposed of.

5. Resolution of Joint Ownership Issues

If there are multiple heirs, it is recommended to enter into a written agreement on the use or division of property. This helps prevent future disputes. A joint ownership agreement may include terms on how the property is used, who and how costs are paid, and on what terms one co-owner may alienate their share.

Planning Inheritance Before Death

It is prudent to resolve inheritance issues during one's lifetime:

1. Draft a will - this allows you to determine the fate of your property according to your wishes

2. Real estate transactions during lifetime - real estate can be transferred to close relatives during one's lifetime

3. Gifts agreements - the opportunity to transfer property as a gift, which in certain cases may be more tax-friendly

A will is essentially a kind of insurance for the future – it gives you control over the fate of your property even after you are gone. For example, you can specify in your will that your cottage goes to a grandchild who always spent summers there, rather than being divided equally among all children.

Special Solutions in Real Estate Inheritance

Real Estate Located Abroad

If the inheritance includes real estate abroad, you must also consider the inheritance laws and procedures of the respective country. In such cases, it is advisable to consult with specialists from both countries.

Inheriting foreign property can be more complex because other countries may apply different inheritance rules. For example, in some countries there may be a mandatory share for all children, while in another country the testator has greater freedom to decide who the property goes to.

New Developments and Factory Houses

If the inheritance includes a new development or factory house, different conditions may apply, especially if the property is under construction or acquired on special terms.

In the case of new developments, the testator may have entered into a contract that has not yet been fully executed – for example, only part of the purchase price has been paid or construction is still ongoing. In such cases, it is important to carefully review all contracts and obligations associated with the inherited property.

Summary

Real estate inheritance is a process that requires knowledge and careful planning. Following the correct steps allows you to avoid problems and ensure a smooth transfer of property. Kinnisvara24 provides support throughout the process, from consultation to real estate sale or management.