The estate includes a residential property located in Germany, but only a small amount of freely available cash. A possible inheritance tax payment seems to force a sale. Before you therefore make a binding decision to sell, it should be examined whether the special deferral rule of § 28 Absatz 3 ErbStG is applicable.
Determine tax amount and payment problem separately
First the actual tax issue must be assessed. Which tax applies to which acquisition? Which exemptions or other particularities have already been checked? This page does not calculate inheritance tax and does not confirm family home or other exemptions.
For the completely fictitious case we assume €40.000 of tax to be paid and €12.000 of actually available cash for that purpose. The arithmetic gap is €28.000. The assumed high property value is not an already existing account balance.
Have the special rule examined specifically
§ 28 Absatz 3 provides, on application, for a deferral of the inheritance tax attributable to property used for residential purposes for up to ten years, insofar as it can only be raised by the sale of that asset. In the case of acquisition by death the provision specifies interest‑free treatment. It also provides for an end where ownership passes to third parties or the residential purposes permanently cease. [STUNDUNG]
This does not mean that a single residential property is automatically exempt from any payment for ten years. The actual conditions, the required extent and the appropriate design of the application are clarified with suitable advice. This article does not deal with foreign real estate and assumes no rules for business assets.
Disclose the actual financing situation
Set out existing liquid estate and personal funds, other relevant asset positions, existing obligations and possible other financing routes in a comprehensible manner. Ask specifically which evidence the competent authority requires in your case. Do not invent unavailable funds and do not treat unconfirmed loans as already approved.
An application is not yet a confirmed change of the due date. The impending payment remains visible in the provisional cash plan until the actual status with the authority and the necessary next steps have been clarified.
Also plan the end of a confirmed deferral
A deferral does not eliminate the tax. For the personal decision, confirmed payment terms, ongoing property costs and financing of the later end point must fit together. An amount that is merely postponed and still uncovered would not yet be a completed plan.
The possible benefit of this examination is a more conscious decision between actually available options. Whether keeping, financing or selling is sensible remains an individual question. Today's lack of funds alone should not be equated without examination with the absence of any statutory deferral possibility.