Inherited a house or flat: what to do with the property?
An inherited property is more than just an asset – it is often linked to memories and emotions. But soon the practical question arises: should you move in yourself, let it out or sell it?
The key is lying on the table. Your parents’ house, your aunt’s flat or your grandparents’ holiday home now belongs to the heirs. But once the initial organisational steps have been taken, a crucial question arises: what should be done with the property? Move in, let it out or sell it – every solution has its pros and cons. In practice, there are usually three options that are chosen most frequently.
One heir takes over the property
It is not uncommon for a member of the community of heirs to wish to take over the house or flat and use it themselves in future. In this case, the remaining heirs must be compensated in accordance with their shares of the inheritance. To ensure the division of the estate is fair, a professional property valuation is advisable. To determine the open-market value, it is advisable to consult an independent property valuation expert. Depending on the situation, it may be worth obtaining two valuations and using the average as the basis for reaching an agreement. It should also be borne in mind that the person taking over the property may need additional funds to pay out the co-heirs. Consequently, the existing mortgage is often adjusted or increased. Until the estate is definitively divided, the members of the community of heirs are generally jointly liable for the obligations relating to the property.
Renting out the property jointly
Another option is to leave the property in the ownership of the community of heirs and let it out. This allows the heirs to retain a stake in the property and generate ongoing rental income. However, this solution also presents organisational challenges. Letting, maintenance and management involve a significant amount of work and require regular coordination. As important decisions within a community of heirs often have to be taken jointly, it is advisable to set out responsibilities and procedures in writing. It is also conceivable that a member of the community of heirs might live in the property themselves and pay the community of heirs a rent at the going market rate.
Selling and dividing the proceeds
If the heirs do not wish to commit to the property in the long term, or if it is not possible for individual family members to take it over, selling the property is a viable option. After deduction of the selling and transaction costs, the proceeds from the sale go into the estate and are distributed in accordance with the heirs’ shares. This is often the simplest and clearest solution, particularly where there are several heirs or the property no longer meets current needs. It should be noted that in the Canton of Bern, no property gains tax is payable either upon inheritance or upon the division of the estate. Taxation is deferred and only triggered upon a subsequent sale of the property. Nor does the division of the estate itself, in principle, trigger any transfer tax.
Seek expert advice at an early stage
Every inheritance is different. In addition to financial considerations, family and emotional factors often play an important role. This makes it all the more important to carefully examine the various options and to understand the consequences at an early stage.
“Well-informed advice provides clarity and helps to find the best solution for everyone involved,” emphasises Bern-based estate agent Thomas Graf. Whether the focus is on a takeover – that is, purchase by one of the heirs – letting the property, or selling it to a third party, the experienced team of experts at thomasgraf ag will be happy to advise you! We are a certified member of the Swiss Chamber of Estate Agents (SMK). Thanks to our close cooperation with the asset manager and family office service provider TRIONINVEST, as well as the financial services provider hypolino ag, we offer you a combination of property-specific and financial expertise, many years of industry experience and a strong network.