Hello,
I am currently in a somewhat complicated situation and am seeking advice here.
The situation is as follows:
My wife and I are currently renting, but we want to move back to our hometown sometime this year or next.
There, as in many other parts of Germany, the real estate market is very tight. In other words, extremely high purchase and rental prices for properties that aren’t really worth that much.
Since we have been looking for a suitable property to buy for quite some time without finding anything appropriate or only finding grossly overpriced options, we have considered moving into the original family home where my father currently lives alone.
In order for us to move in there, it would be necessary for my father to find a 1-2 bedroom (or 1-2 room) apartment for himself. Our idea was that we would act as buyers for that apartment and then rent it to my father.
At the same time, we would move into the family home as tenants and pay rent to my father.
My father would grant us the first option to buy the house, and we could later decide whether to take over the house or not.
Of course, he could also sell the house to us directly at a reasonable price now, but the problem here is:
1. There are still outstanding debts on the house.
2. I have two brothers who also need to be considered. In other words, a gift in this sense is currently difficult without anyone feeling overlooked.
Therefore, the rental model has the advantage that over the next few years, during which our income situation is uncertain (family planning/moving/job changes), we would not face such a high financial burden. Buying an apartment for around 200,000-300,000 euros (approximately 220,000-330,000 USD) is much more manageable for us than purchasing a house for 500,000-700,000 euros (approximately 550,000-770,000 USD).
Additionally, if I understand correctly, when renting to a family member, it is possible to save on taxes (reduce deductible expenses?), although it must be noted that at least 50% of the local market rent must be charged.
Does this make sense?
Have I overlooked something significant?
Or is there perhaps a better solution we haven’t thought of yet?
Thank you very much for your help.
I am currently in a somewhat complicated situation and am seeking advice here.
The situation is as follows:
My wife and I are currently renting, but we want to move back to our hometown sometime this year or next.
There, as in many other parts of Germany, the real estate market is very tight. In other words, extremely high purchase and rental prices for properties that aren’t really worth that much.
Since we have been looking for a suitable property to buy for quite some time without finding anything appropriate or only finding grossly overpriced options, we have considered moving into the original family home where my father currently lives alone.
In order for us to move in there, it would be necessary for my father to find a 1-2 bedroom (or 1-2 room) apartment for himself. Our idea was that we would act as buyers for that apartment and then rent it to my father.
At the same time, we would move into the family home as tenants and pay rent to my father.
My father would grant us the first option to buy the house, and we could later decide whether to take over the house or not.
Of course, he could also sell the house to us directly at a reasonable price now, but the problem here is:
1. There are still outstanding debts on the house.
2. I have two brothers who also need to be considered. In other words, a gift in this sense is currently difficult without anyone feeling overlooked.
Therefore, the rental model has the advantage that over the next few years, during which our income situation is uncertain (family planning/moving/job changes), we would not face such a high financial burden. Buying an apartment for around 200,000-300,000 euros (approximately 220,000-330,000 USD) is much more manageable for us than purchasing a house for 500,000-700,000 euros (approximately 550,000-770,000 USD).
Additionally, if I understand correctly, when renting to a family member, it is possible to save on taxes (reduce deductible expenses?), although it must be noted that at least 50% of the local market rent must be charged.
Does this make sense?
Have I overlooked something significant?
Or is there perhaps a better solution we haven’t thought of yet?
Thank you very much for your help.
pagoni2020 schrieb:
So you would gain a noticeable advantage, which in itself is not an issue.
But – what advantage would the father have? The father’s wish is for his house to stay within the family and not be sold. Even though I personally don’t have such an attachment to properties, I can understand that. He may have built it himself and wants his future grandchildren to play in the garden. Clearly, it’s no guarantee that transferring it now to one son will ensure this, but if the others already own their own homes (likely newer ones), then transferring it during the father’s lifetime makes it more likely the house will remain in the family than if, after the father’s death, no one needs the house, and everyone just wants to get the highest price. I do see a real possibility here to fulfill the father’s wishes, even if he doesn’t gain any financial benefit from it.
pagoni2020 schrieb:
considering what the father himself wantsBut this is nowhere mentioned. The discussion here is simply about what the original poster envisions. If it were the father’s wish, the original poster would not have this problem at all—meaning, it would not be his construction site.
P
pagoni202018 Mar 2021 12:46RomeoZwo schrieb:
The father’s wish is for his house to stay in the family and not be sold. Even though I don’t have such an emotional attachment to properties myself, I can understand that. He may have built it himself and hopes that his future grandchildren will play in the garden. Of course, there’s no guarantee if he transfers it to one son now, but if the others already have their own homes (probably newer ones), it’s more likely to stay in the family with an immediate transfer than if after the father’s death nobody needs a house anymore and everyone just wants the maximum amount of money. I definitely see a way to honor the father’s wishes, even if he doesn’t gain a financial advantage from it. I understand that clearly, and apparently that is ONE of the father’s wishes, which can be seen as an advantage for him. What I find difficult, however, is finding a one-bedroom or two-bedroom apartment for the father. From my own experience, parents often hold back too much and almost "sacrifice" themselves for their children, but of course they also have their own wishes and fears. So far, I’m missing that information. If the father then lives farther away and special care is not mutually agreed upon, he ends up alone in his apartment... so those details would be important to me as part of any possible arrangement. Money would be less important to me as a father.
I would gladly grant significant advantages to the younger people who will take care of me/us, and the others would have to understand that, since the well-being of my (future testator) is my priority.
RomeoZwo schrieb:
and hopes that his future grandchildren will play in the garden. I fully understand and agree—grandparents usually enjoy being involved and experiencing that. But… do the children (heirs) want such permanent closeness to the father, and the potential obligations that might come with it?
RomeoZwo schrieb:
I definitely see a way to honor the father’s wishes, even if he doesn’t gain a financial advantage from it. Absolutely—but I am also sure that this is only ONE of the father’s wishes, not the only one. It’s unlikely that he wouldn’t also want to be close to his family and have security in old age.
As mentioned, young people tend to focus more on finances, while older people usually care less about money and more about avoiding loneliness and staying close to family.
I will leave all other aspects aside since this topic typically involves many people and various tax implications, leading to multiple opinions that would only complicate things further. However, there is one point I find worth exploring more deeply than it has been so far:
Where does this wish come from, and is it realistic? What will it mean to your father if you renovate the house differently from what he envisioned? So far, I haven’t seen who this father actually is or why only the father is mentioned: Has the mother passed away, or are they divorced or separated?
My concern is that the house might be symbolically overloaded—meaning it serves as a sort of museum, a place representing when the family was still intact or the marriage was still whole. Then you come along and throw the kitchen into recycling, where Mom used to cook Dad’s favorite dishes—if that’s the case, he might as well have handed the house over to strangers!
Or was the father a bank robber, and the house must remain in the family because the loot is embedded in the garage foundation?
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
Patblue schrieb:
The point is that my father wants the house to stay in the family.
Where does this wish come from, and is it realistic? What will it mean to your father if you renovate the house differently from what he envisioned? So far, I haven’t seen who this father actually is or why only the father is mentioned: Has the mother passed away, or are they divorced or separated?
My concern is that the house might be symbolically overloaded—meaning it serves as a sort of museum, a place representing when the family was still intact or the marriage was still whole. Then you come along and throw the kitchen into recycling, where Mom used to cook Dad’s favorite dishes—if that’s the case, he might as well have handed the house over to strangers!
Or was the father a bank robber, and the house must remain in the family because the loot is embedded in the garage foundation?
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
Thank you again very much for all the contributions and opinions; they really help me look at this challenging situation from every possible perspective.
I now believe, as some comments have confirmed, that the mutual rental scenario mainly benefits the government. Whether I would actually gain a tax advantage from it is questionable.
The cleanest solution, I think, would be this proposal:
The first step would, of course, be to have the house appraised by a professional, so you can plan the next steps based on that value.
I can well imagine continuing down this path.
Many thanks to everyone.
I now believe, as some comments have confirmed, that the mutual rental scenario mainly benefits the government. Whether I would actually gain a tax advantage from it is questionable.
The cleanest solution, I think, would be this proposal:
RomeoZwo schrieb:
You write that you can manage financing up to 550k. Let’s assume the house is worth 600k. Then one option would be for the father to sell it to you for 400k, and at the same time, a will is created stating that the remaining 200k is a "gift" to you as an advance inheritance with waiver of compulsory portion (i.e., you would not inherit anything later on!).
From the 400k the father receives from you, he buys himself a nice new apartment. This can later be inherited by the other two brothers.
The first step would, of course, be to have the house appraised by a professional, so you can plan the next steps based on that value.
I can well imagine continuing down this path.
Many thanks to everyone.
H
Hausbautraum2019 Mar 2021 08:57Patblue schrieb:
In the first step, it would naturally make sense to have the house appraised by a professional, so you can use that value to plan the next steps. Overall, I would approach it the same way.
Another option might be to agree on a market value with the sibling(s).
The appraiser’s fee is usually in the four-digit range, and in the end, it’s still just an estimate.
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