Kitchen blackmail situation – how to deal with it?

To make it short; my wife and I are subletting an apartment, we just had a baby, and we had a verbal agreement with the landlord to take over the contract after the sublease was over. This would be discussed more in detail as we got closer to September, which is when our sublease ends.

Now, the landlord mentioned that she would like to get some money back for what she had spent on the kitchen. We thought it sounded reasonable, but we didn't expect this;

Kitchen:

• Furniture: €5,691.84
• Kitchen stove (AEG, Media Markt): €829.89
• Refrigerator (Amica): €399.00
• Tiles: €560.00
• Handyman construction + tiles : €3,000.00

Total for Kitchen: €10,480.73

Bathroom:

• Furniture + constructions: €556.00

Bedroom:

• Wardrobe: €390.00

Chamber:

• Cabinet: €336.98

Total Investment: €11,763.71

Compensation Required: €9,000

After confronting her about how unreasonable this ask is, and that it is calculated way too high (in Germany, a kitchen depreciates 24% the first year, and 4% each following year, https://umziehen.de/suche-planung/abloese-fuer-die-kueche-wie-viel-darf-der-vormieter-verlangen-5367 )

she responded:

"However, I want to remind you of the conditions I set when you first moved in. I made it clear that I would either move back into the flat myself or pass it on completely, and that fair compensation for the investments I made in the apartment would be necessary.With that in mind, I need to stick to my original request as compensation. This amount is already a significant reduction from what I originally spent.I understand this may not match your expectations, but these terms are important for me to move forward.Please let me know how you’d like to proceed. I hope we can resolve this quickly so everyone can move forward."

I have asked her why the depreciation rule does not apply to her, and am awaiting a response.

This is clearly a kitchen bribe, and we're wondering what we can do. We have offered 6K, and she refuses. She wants us to pay for the handyman she hired to assemble it too, 3000 Euros. Most people can assemble their own kitchen, and you only get paid for the actual products in your kitchen, not the amount of hours you put in it.

What can we do here? I must also mention my wife is seriously ill after the birth, and the landlady knows this too. I would have to move apartment with my severely reduced wife and a newborn baby, only because I am not willing to give in to this blackmail situation.

I find it evil.

Appreciate any advice.