How to Handle Inherited Real Estate and What You Should Know About Selling It

Inheritance is a field that many of us inevitably encounter during our lifetime. This topic can arise unexpectedly, and accepting and realizing an inheritance may not be as straightforward as it initially seems.

What to do when there are multiple heirs?

If an inheritance has been accepted by multiple heirs, the inherited property belongs to them jointly. This means that both the inheritance and the rights and obligations belonging to the inherited property belong to all co-heirs jointly. If it is desired to dispose of individual inherited items, the consent of all co-heirs is required.

A co-heir can independently dispose of their intellectual share of the inherited property collectively, but cannot independently dispose of items belonging to the inherited property or their intellectual share thereof. (This means that if the inherited property consists of an apartment and a car, and three heirs have accepted the inheritance, then one heir can independently sell their intellectual share of the inherited property collectively, i.e., sell 1/3 of the car and apartment at once). If a co-heir sold their share of the inherited property collectively to a third party, the remaining co-heirs have a right of first refusal, which can be exercised within two months.

If, however, it is desired to dispose of individual inherited items, it is advisable to divide the inherited property. When dividing the inherited property, it is determined which items or their parts belonging to the inheritance, as well as rights and obligations, remain for each co-heir. The inherited property is divided among the heirs according to their share of the inheritance, based on the ordinary value of items belonging to the inherited property at the time of division.

What to pay attention to if inherited real estate has debt burden?

If heirs are not aware of the size of the obligations acquired by accepting the inheritance (whether the debt burden exceeds the value of the inheritance), it is advisable to make an inventory of the inheritance. After making an inventory, the heir's responsibility for obligations related to the inherited property is limited to the value of the inherited property.

What taxes to consider when inheriting real estate?

When inheriting real estate, new land owners should consider the obligation to pay land tax. There is no inheritance tax in Estonia. Accepted inherited property is not taxed with income tax. However, income tax is levied on gains from disposal of property (sale of inherited real estate) and rental income (renting/leasing inherited real estate). However, there is an exception here — gains from disposal of real property are not taxed with income tax if the seller used the residential premises as their place of residence. This tax exemption can be used for one disposal within two years. If real estate was not used as a residential premises, the heir can deduct the costs made to the real property (based on cost documents, these costs can be deducted from the sale price before calculating income tax). Expenses made by the testator for the acquisition of the property cannot be taken into account.

What are the costs associated with inheritance proceedings?

Notary fees for conducting inheritance proceedings are established by the notary fee law. Notary fees are added to value added tax.

• Application to initiate inheritance proceedings — €63.90
• Certification of declaration of waiver of inheritance — €6.35
• Certification of declaration of acceptance of inheritance — €65.15 (According to the Law of Succession, an heir does not need to accept the inheritance to receive inherited property; the inheritance passes to the heir automatically).

If the declaration of acceptance or waiver of inheritance is included in the application to initiate inheritance proceedings, the fee is charged only for initiating inheritance proceedings.

• Conducting summons proceedings provided for in the Law of Succession — €25.55
• Identification of heirs and issuance of certificate of inheritance — €102.25

In the event that an inventory of inherited property is carried out through a court executor, a court executor fee must be paid depending on the value of the property.

If the inherited property includes real estate and an application is filed for heirs to be entered as owners in the land register, an additional notary fee is added. Preparation of an application project to be submitted to the court land registry or registry office, confirmation of the applicant's signature and issuance of a digital extract from the application — €35.75. If there are several applicants, a fee for confirmation of signature from the second person onwards is added to the fee — €6.35.

What obstacles may arise when reselling inherited real estate?

In practice, problems arise when reselling inherited real estate in connection with inheritance by minors. If the group of heirs also includes a minor, court permission is required to sell the real estate. In such a case, parental consent for resale of inherited real estate is not sufficient. In order to obtain permission from the court, one must justify why the real property is to be sold and whether and how this constitutes a transaction beneficial for the minor.

Article source: Modern Home