ᐅ Moving in before transfer of ownership / usufruct / rental agreement – disadvantages?
Created on: 31 Mar 2021 13:22
F
Frelili
Hello everyone,
I am completely new here and also new to the topic of homeownership and property, and I feel a bit like I’m in a vast, bottomless pit.
I would like to ask a first question here for orientation and try to keep it as brief but precise as possible. Thank you.
So:
The question:
Is it allowed (I think yes), but is it somehow disadvantageous if the child already moves into the apartment now, i.e., before the gift transfer and rental agreement, and lives there rent-free for three months?
Are there any disadvantages regarding the tax authorities, the gift, the property valuation for the gift contract, or anything else? Or does it not matter at all?
Thank you very much!
Good luck
I am completely new here and also new to the topic of homeownership and property, and I feel a bit like I’m in a vast, bottomless pit.
I would like to ask a first question here for orientation and try to keep it as brief but precise as possible. Thank you.
So:
- An apartment was purchased by the parents and has remained empty ever since, but it would basically be move-in ready immediately (more or less, there is a functioning bathroom and an old kitchen with old but working appliances).
- The apartment is therefore empty and unoccupied, never lived in by the parents, and never rented out.
- The apartment is supposed to be gifted to the child within the next three months, at the latest by June of the current year.
- The child (the recipient of the gift and thus the future owner) wants and is allowed/able to move into the apartment as a tenant.
- The rental agreement between the parents (the usufruct grantors) and the child (the future owner but also tenant) is planned to be signed only on the day/date of the gift transfer.
The question:
Is it allowed (I think yes), but is it somehow disadvantageous if the child already moves into the apartment now, i.e., before the gift transfer and rental agreement, and lives there rent-free for three months?
Are there any disadvantages regarding the tax authorities, the gift, the property valuation for the gift contract, or anything else? Or does it not matter at all?
Thank you very much!
Good luck
Thank you.
In the end, what matters to us is whether we can proceed like this...:
... or whether this in any way affects or blocks the subsequent steps such as notarization, gift transfer, property valuations, or other processes.
In other words, whether for any reason it would be advisable to proceed with the apartment still empty and completely unoccupied when going through these upcoming steps, or if it does not matter.
In the end, what matters to us is whether we can proceed like this...:
Frischluft schrieb:
...
The question:
Is it allowed (I think so), but is it somehow disadvantageous if the child already moves into the apartment now, that is, before the gift/lease agreement is finalized, and lives there rent-free for three months?
Are there any disadvantages regarding the tax authorities, the gift, the property valuation for the gift contract, or anything else? Or does it not matter at all?
...
Frischluft schrieb:
...
We just want to be sure and feel confident whether the child can live in the apartment rent-free for 1-2 months before all the formalities (May/June) are completed and officially register with the municipality, in other words, really move in already. Or whether this might have any consequences, effects, or disadvantages that we may not be aware of.
...
... or whether this in any way affects or blocks the subsequent steps such as notarization, gift transfer, property valuations, or other processes.
In other words, whether for any reason it would be advisable to proceed with the apartment still empty and completely unoccupied when going through these upcoming steps, or if it does not matter.
RomeoZwo schrieb:
In your example, at the beginning:
Tenant --> You
Landlord --> Your parents
And later after the gift transfer:
Owner --> You
Usufructuary --> Your parents
Landlord --> Your parents (if not owner-occupied).
...Yes and no. Not quite.At the beginning:
Tenant -->
Landlord -->
The apartment belongs to the parents, it is vacant, unleased, and unoccupied, and nobody is registered at the address.
And later after the gift transfer:
Owner --> You, yes, the child
Usufructuary --> Your parents, yes, the parents
Landlord --> Your parents (if not owner-occupied), yes, the parents
Tenant --> the child
Frischluft schrieb:
In the beginning:
Tenant --> You, no, there is no tenant [I]at all[/I]
Landlord --> Your parents, no, since there is no tenant, there is no landlord either
The apartment belongs to the parents, is vacant, unrented, and unoccupied, and no one is registered at the address.I thought the child was supposed to move in before the ownership transfer? In the end, it doesn’t really matter. I just wanted to point out that “optimized” rents here could potentially have negative effects regarding gift tax.
Ysop*** schrieb:
To be honest, I don’t get it. Why should the child rent their own apartment? Because someone else, in this case the parents, hold the usufruct right on the apartment. Whether this makes sense from a tax perspective (keyword: parents’ income tax) is another matter.
With the usufruct right, you can also ensure that the child cannot simply sell the apartment (which you might want to live in yourself at a later time).
P.S. Since the child is an adult (they are supposed to rent), parents can also consider including a clawback right.
RomeoZwo schrieb:
Because someone else—in this case, the parents—has the usufruct right on the apartment. Whether this makes sense tax-wise (keyword: parents’ income tax) is another matter.
With the usufruct right, you can also secure that the child cannot simply sell the apartment (in which one might want to live later).
P.S. Since the child is already of legal age (and is supposed to rent), one could also consider a right of recourse on the parents’ side. Ah, I was thinking of a simple right of residence for the parents.
I consider a right of recourse unlikely, since the parents actually want to move into the apartment after one year. In that case, they wouldn’t have needed to gift it in the first place.
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