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.
saralina87 schrieb:
Haven't your parents talked to you about the potential inheritance? First of all, the "potential inheritance" is my parents' retirement provision...
saralina87 schrieb:
I find it strange not to arrange these things while people are still alive. ... but at the moment they are still alive—and in their old age they enjoy living in their own home with a garden, getting fresh air despite COVID, enjoying exactly what they have built for themselves.
In this case, selling the joint marital dream of the father might be perfectly fine... probably the father’s priorities have shifted due to the separation—that happens often...
I would be interested in the father’s age. Many discussions here in the forum about inheritance and parents are based on children speaking for the parents instead of with them. The result is often that the parents are mature adults, sometimes even younger than me, who are expected to live in small basement flats no bigger than my current living room.
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T_im_Norden20 Mar 2021 10:23As a farming family, this is naturally handled differently, primarily to prevent the fragmentation of the land. Even when it comes to family businesses, this is quite common. But that is rather not the case here.
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BackSteinGotik20 Mar 2021 11:04pagoni2020 schrieb:
There is also the simple and obvious option that all siblings come together to support their father staying in his own home (which he is so attached to). The house is too big for him? Great. Each of the children sets up their own room there and visits dad regularly, even better for the grandchildren. Grandpa sits in the garden chair, enjoying watching his family tending the garden or playing in it, and they can stay overnight anytime.
I know this old-fashioned idea might sound strange to some, but for me it truly means living family values and social behavior within the family. The only reasonable option is a sale at a fair market price—if mother and father agree. Clear and simple.
But I find your posts really interesting because they highlight the huge fracture in the structure of our society. There is a demographic bomb, and due to our population pyramid and the unbalanced voter base (and their demands), there are fewer and fewer chances for a healthy future for everyone. This complex situation is only due to the current state of the country; it is not set in stone or fallen from the sky.
To put it shortly and bluntly about your example—everyone else should work hard for me and clearly take care of me. For that, there’s even a bed in the attic and a personal leaf rake for the grandchildren.
How the next generation, who cannot afford real estate or retirement benefits anywhere near as generous as those of today’s seniors, will manage later and right now, does not matter.
You rather glossed over this—where do the children and grandchildren live? Why can’t they find suitable accommodation? And why is it more important for a pensioner to hold on to a house with a garden until old age than for a young family to have enough space to move around?
There is also another kind of social behavior within the family, where the patriarch is not the center of attention but retires and hands over the reins to the next generation.
@BackSteinGotik : I understood @pagoni2020 differently. He points out that the house represents the pension provision for the father (or in other cases both parents), and if it is passed on, the retirement provision obviously needs to be secured differently. And if the early heirs cannot cover this adequately with money, then, in my opinion, it’s necessary to take action yourself. People are living longer and more illnesses are becoming treatable. But that is expensive...
In the past, when the responsibility was handed over during the parents’ lifetime, parents and grandparents could also rely on being cared for, often even in the same house...
In the past, when the responsibility was handed over during the parents’ lifetime, parents and grandparents could also rely on being cared for, often even in the same house...
T_im_Norden schrieb:
I find it interesting how some expect to inherit their parents’ property and have already mentally divided the spoils. Completely unemotionally: I would be thankful if potential co-heirs showed their true colors early on – that way you know where you stand and can delete them from your contact list, related or not, or maybe even because of that.
saralina87 schrieb:
Haven’t your parents talked to you about the potential inheritance? Or do you not discuss it with your children? Unfortunately, there is a strong tradition that ordinary families completely overlook managing inheritance taxes during their lifetime.
saralina87 schrieb:
Maybe with us, it’s also because we are only in the second generation no longer farmers. In those families, even today most (if not all) matters are arranged and transferred while still alive. The retirement house is not a bad concept.
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
P
pagoni202020 Mar 2021 13:18The original poster (OP) raised a topic that naturally meets with different viewpoints, reflecting the fact that various individuals and social groups are represented here. As an older person, I would see this as beneficial; however, the OP perceives such remarks as “not objective.”
Here, however, I see the (understandable) personal desire for an affordable house pushed too strongly into the foreground, which is why I offer my “criticism,” which could also be considered as food for thought.
Only afterward and somewhat incidentally is the equally legitimate mother mentioned. This raises the question of why such an important point—securities for the co-owner mother—was missing until now.
Then I read about the “evil brother” and his completely exaggerated expectations while the OP at the same time is trying to push the market price down as far as possible to suit their own budget. Where is the difference in that?
Furthermore, I read:
In the end, despite drastically downsizing, the father can only provide a generous down payment on his small apartment; so even after his significant setback, he will continue to have debt on it and not even live there rent-free. Quote: “...which should still at least be enough for a generous down payment on my father’s apartment.”
What is completely taken for granted and pushed into the background here: by principle, inheritance happens A-F-T-E-R death. Only then is it an obligation; before that, it consists of understandable wishes!
Let’s be honest, everyone reading this knows it! Here it is really about avoiding the word: “CARE.”
We had this notarized in our case, for which our parents enabled us to build the house. They had a nice apartment in the house, rent-free and with registered residential rights, so I am at least familiar with some of the resulting obligations, benefits, and problems on both sides!
Additionally, there is the common fear that the government might seize the inherited assets as soon as the parents need to move into a care home. People don’t like to admit it, but this often happens, I claim!
I also truly understand that not everyone wants to be close to their parents or take on caregiving responsibilities. That is absolutely fine. But why then the premature claim on the parents’ property? One does not want the person with all their ailments, but one does want the money that would make one’s own life better. I read, hear, and witness this more and more, and it makes my hair stand on end.
We do not expect our children to take care of us, but of course, we would appreciate it if they did, maybe someday. Nobody knows when or how that will happen. We would also do the same for our children. Since we cannot expect that, we take care of our own financial security, and the best way to do that is to create a good life for ourselves. If the government ever seizes our property and the children do not take on care duties, then so be it; I cannot change that. But I want to be reasonably well cared for.
As long as I am still of sound mind (maybe I no longer am), I would even generously bequeath parts of my property to a stranger who takes good care of us. I do not love my children any less than others and give them the freedom to decide how to handle the issue of possible care themselves. That is my plan...
Here, however, I see the (understandable) personal desire for an affordable house pushed too strongly into the foreground, which is why I offer my “criticism,” which could also be considered as food for thought.
Only afterward and somewhat incidentally is the equally legitimate mother mentioned. This raises the question of why such an important point—securities for the co-owner mother—was missing until now.
Then I read about the “evil brother” and his completely exaggerated expectations while the OP at the same time is trying to push the market price down as far as possible to suit their own budget. Where is the difference in that?
Furthermore, I read:
Patblue schrieb:So the OP themselves acknowledges the lack of a possibility for an “equal solution” and now wants to arrange things “somewhat” fairly (the brother wants that too... 😀 ). A truly fair financial solution would be possible, but that is too expensive or impossible for the OP. So, it would automatically become financially unfair in order to work for them, because “a little fair” is not an option.
If there were a way for everyone to be equal with the current status, I would definitely choose it—but unfortunately, there isn’t.
That’s why I’m looking for a way to settle this reasonably fairly anyway.
In the end, despite drastically downsizing, the father can only provide a generous down payment on his small apartment; so even after his significant setback, he will continue to have debt on it and not even live there rent-free. Quote: “...which should still at least be enough for a generous down payment on my father’s apartment.”
What is completely taken for granted and pushed into the background here: by principle, inheritance happens A-F-T-E-R death. Only then is it an obligation; before that, it consists of understandable wishes!
Let’s be honest, everyone reading this knows it! Here it is really about avoiding the word: “CARE.”
We had this notarized in our case, for which our parents enabled us to build the house. They had a nice apartment in the house, rent-free and with registered residential rights, so I am at least familiar with some of the resulting obligations, benefits, and problems on both sides!
Additionally, there is the common fear that the government might seize the inherited assets as soon as the parents need to move into a care home. People don’t like to admit it, but this often happens, I claim!
I also truly understand that not everyone wants to be close to their parents or take on caregiving responsibilities. That is absolutely fine. But why then the premature claim on the parents’ property? One does not want the person with all their ailments, but one does want the money that would make one’s own life better. I read, hear, and witness this more and more, and it makes my hair stand on end.
We do not expect our children to take care of us, but of course, we would appreciate it if they did, maybe someday. Nobody knows when or how that will happen. We would also do the same for our children. Since we cannot expect that, we take care of our own financial security, and the best way to do that is to create a good life for ourselves. If the government ever seizes our property and the children do not take on care duties, then so be it; I cannot change that. But I want to be reasonably well cared for.
As long as I am still of sound mind (maybe I no longer am), I would even generously bequeath parts of my property to a stranger who takes good care of us. I do not love my children any less than others and give them the freedom to decide how to handle the issue of possible care themselves. That is my plan...
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