ᐅ Transfer of Property to Children

Höhlenmensch schrieb:

If he uses the property himself and, for example, it is worth 600,000, wouldn’t he have to pay taxes on the 200,000 difference?

If he inherits and occupies it himself, he does not have to pay any taxes. Even if the house is worth €5 million (max. 200 sqm (2150 sq ft) of living space – otherwise taxes apply to the excess area). Owner-occupation is required for 10 years.

Höhlenmensch schrieb:

In summary, it is probably best to gift the property entirely. Because of the residential right and the resulting reduced value, the exemption amount of 400,000 may possibly not be exceeded.

Yep. (Or usufruct). However, I would formally sell it, because a gift could potentially be revoked in case of long-term care (simplified).

Höhlenmensch schrieb:

Are notary fees fixed according to a fee schedule, or are they negotiable?

They are fixed.

Höhlenmensch schrieb:

Does the reduction in value due to the residential right also apply here? Since the fee is probably based on the value?

Either the house has a full value (without encumbrance such as a residential right), or the contract consists of two values (reduced house value + corresponding value of the encumbrance).

Höhlenmensch schrieb:

Is there any information on the remaining value reduction caused by the restrictive residential right (approximate percentage)?

Monthly cold rent multiplied by remaining life expectancy, discounted back to today.

We transferred rental apartments as gifts while retaining the usufruct rights. This way, our children have no costs or obligations, and the rental income remains for our retirement provision. Only after the last of us passes away can they freely dispose of the property. There are no disadvantages for anyone except the notary fees, and it required no effort other than two notary appointments. The usufruct significantly reduces the property’s value.

Addendum: The usufruct calculation by nordanney was exactly the same for us.

nordanney schrieb:

Monthly net cold rent multiplied by remaining life expectancy, discounted to today.

And the tax office accepted it that simply? The formula for usufruct that I know is:
Annual net income multiplied by remaining life expectancy (from tables)
Annual net income is the gross income (i.e., net cold rent) minus operating costs (non-chargeable additional costs, reserve for maintenance, rental loss provision).

In the case of a right of residence, it is often the case that this expires after a certain "period of non-use". In standard contracts often 6 months. This means that if the beneficiary moves out (senior-friendly apartment, nursing home), the right ends. Theoretically, this could happen as soon as tomorrow, which would create an interesting tax saving opportunity.

RomeoZwo schrieb:

Formula for usufruct,

Usufruct is different from the intended right of residence. That is correct.

Thanks first of all, I’ll update later on how it went.
You should start thinking early to possibly make things a bit easier for the next generation.
They will definitely face quite a lot anyway……

Even though criticism is not really welcome here, I still want to point out that it is basically scandalous how politics has watched— and continues to watch—prices skyrocket to astronomical levels.
That’s why I dare to quote one of our “leading” politicians once more:
“We stand for the idea that in the future, even a worker will be able to afford a small house.” 🤨 …and he was smiling again—I’ll tactfully not name him!
Greetings to everyone who can still smile about this too…… 😉

Höhlenmensch schrieb:

Even though criticism is not welcome here, it should still be noted
that it is basically scandalous how politicians have watched prices
skyrocket.

Honestly, it is largely due to a) rising land costs and b) the demands of homebuyers. Where houses used to be 100-120sqm (1,100-1,300 sq ft), today they tend to be more like 150-160sqm (1,600-1,700 sq ft), often even larger. Plots of only 250sqm (2,700 sq ft) for semi-detached homes are no longer sufficient; detached houses now require at least 600sqm (6,500 sq ft).

In fact, it is still possible to get an affordable house with a garden. Prices of €220,000–250,000 (around $220,000–250,000) for a complete home with land are easily achievable outside major cities or metropolitan areas. These are typically builder-developed projects with standard, “off-the-shelf” houses.

Besides that, politicians have not only been passive observers but have actively fueled the price spiral with unsuitable subsidies. Programs like KfW loans and Baukindergeld are unnecessary tools that have flowed almost directly into price increases. So, you are right in saying that politics have not handled the situation well.