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.
P
pagoni202020 Mar 2021 23:18Stefan001 schrieb:
edit: Upon rereading, I realized that the post might come across as somewhat one-sided and simplified. So please don’t take it too strictly.No worries; serious matters are sometimes discussed here, so things can get a bit heated, and no one should be too sensitive.Stefan001 schrieb:
I think the criticism was meant to say that "your" generation, thanks to the baby boom in our democratic government, has been lucky to represent the majority of voters throughout their lives and thus may have secured a good portion of their own wealth at the expense of the younger generation.You probably assume that money used to fall from the sky. It was my/our life, and that’s how we accepted it—I would advise you to do the same. We were children of refugees, others had more… so what, did we still have fun? Would you have wanted to trade places? Definitely not! Colleagues born five years earlier got caught in a wave professionally where only suicide could save their careers, then years of stagnation followed due to system changes. Should I complain about that? Was I too late for the "…Boom"? Everyone gets their own life, some by the banks of the Ganges, others dusted in gold. What can I say about the baby boom—there is always improvement but also setbacks. That’s just how it is. You apparently don’t know much about the past; I can gladly share circumstances with you that you would never want to experience or face. We were certainly no heroes back then, no way, but I find today’s constant complaining barely bearable. Often it sounds more like inability to cope with life, where others are always to blame or others always seem to have it better.Building in 1959 and building in 2021 have as much in common as apple pie and a meat patty. My parents’ terraced house built in 1959 was about 90sqm (970 sqft) over three floors, with a wood-burning stove, a wood stove in the bathroom, bathing once a week in succession, otherwise cold water. Two families lived there, subletting due to chronic lack of money (no government loans or subsidies like KfW back then 😀 ). Our shared children’s room for three was in the attic WITHOUT any insulation (in summer) and no heating (in winter), so we used hot water bottles. That’s what they called building.
These are some amusing examples, and in hindsight, I sometimes romanticize it, but on closer look, much of it was humiliating, painful, and very unfair. Many of my friends were not allowed by their parents to attend grammar school, whereas today every child can, thanks to their parents. Half of their earnings as apprentices had to be given to the household as board money. Nevertheless, my life was good, and I made the best of it, like everyone I knew. Nobody complained like what’s usual today; we didn’t demand anything from our parents.
What kind of house are you building today? With KNX smart home system, garage, external thermal insulation composite system (ETICS) or similar, heat pump, eco-friendly products, underfloor heating, and a children’s bathroom fit for little princes, and so on? That’s great, and I am happy for my children and us that so many things have improved so much. Today, children have salaries and labor rights we never dreamed of, they can study whatever they want with government support. Just assume that things were NOT better or easier before—that’s the right perspective.
Stefan001 schrieb:
Hence a possible claim of the younger generation on the money of the older generation.Where does this "claim" come from? I’m stunned… a claim on my wallet while I’m still alive? WOW. The law only recognizes inheritance AFTER death, I don’t see any baby boom mentioned here. Or is it some supposed "moral" obligation because they’re one’s parents? But what if you earn twice as much as your brother and he had some other "boom" luck or misfortune? Does that brother The explosive increase in nursing home places between 1960 and 2020 might show you how much the younger generation has distanced itself from the parents. People want (understandably) maximum freedom, independence from the older generation, as few obligations as possible, yet the money should flow before death because they feel this "claim," often without ever lifting a finger.
The nursing homes are full of lonely people whose children live in their own homes; visits are rare due to stress. Before early inheritance payments, they somehow had more time… when it’s possible again, visit nursing homes yourself and see if I’m not telling the truth. Back then, building a house was only possible because we gave something in return, and it was mandatory to do so—but this giving (care or support) is no longer quite so popular today because many people are so stressed. I find that unfortunate for both sides—I have always really liked family.
Stefan001 schrieb:
The injustice has been known for a long time, but it seems most of the population (who was that again?) has no interest in change.Which injustice exactly? What kind of change? Today’s younger generation often seems quick to get nervous when change appears even in the smallest form and calls for help. Tell me what necessary change I, an old-timer, am supposedly preventing or unwilling to support or blocking you from carrying out or living? I’m genuinely interested!P
pagoni202020 Mar 2021 23:40ypg schrieb:
It may be that @pagoni2020 reflects your "parent" generation in this situation – but the fact is, he has also built something for himself. Exactly. Neither the referenced "baby boom" covered our 8% (percent) mortgage interest, nor the care and support of our parents over 20 years, nor did it solve any of our other problems. As a FAMILY, we benefited from each other and committed to a long, often difficult responsibility. It was what it was, and we made the best of it... with many stumbles, but independently and without complaining or expecting anything in return!
ypg schrieb:
The current generation may struggle to find suitable and affordable building land or houses, but @pagoni2020 faced the same situation and managed to find a nice plot. Of course, the current generation has its own problems—I see and hear about them too. But to whom should we complain? No one wanted to hear our complaints back then. We could only afford to build in rural areas with a one-way commute of 1.5 hours (1.5 hr). I’m sometimes surprised by what people today consider as “expectations.” I want my children to have maximum freedom; I take care of myself and they take care of themselves. I am very happy to leave something behind for them—as much as possible, even. If I didn’t feel this way, I could have easily rented a stylish youth apartment here in Dresden and spent my money recklessly. We talk about this very openly, but none of my children feel they have any current claim to my property. Somewhere along the line, something went wrong.
pagoni2020 schrieb:
There is also the common fear that the state might seize inherited assets as soon as the parents need to move into a care facility. People don’t like to admit it, but I claim it often happens! Long-term care insurance is a rather strange system. The benefits usually run inversely to the contributions paid, because: If someone has been diligent, paid high contributions, and simultaneously paid off a house, they end up at a significant disadvantage compared to someone who has paid little or no contributions and also has no official assets. With my parents, care is currently not an issue, and I hope that, if the time comes, we can manage without a care home. However, if things turn out differently, I would have no problem openly admitting to making the necessary arrangements.
P
pagoni202021 Mar 2021 08:53Schelli schrieb:
Long-term care insurance is quite a strange system. Benefits usually decrease as contributions increase, because if someone has worked hard, paid high contributions, and simultaneously paid off a house, they end up at a significant disadvantage compared to someone who has paid little or no contributions and also owns no official assets. For my parents, care is currently not an issue, and I hope that if it ever becomes necessary, we can manage without a nursing home. However, if the situation turns out differently, I would have no problem openly admitting that I had made the appropriate “provisions.” That’s true! On one hand, it’s good that this system exists, but on the other, you can’t help but be amazed by everything that comes with it. Compared to that, the approval process for KfW grants is like a child’s birthday party. It’s also crazy how individual assessments are made regarding what the person is still capable of and how much time is allocated for that. As you mentioned, there are currently many points of criticism, and I’m no longer exactly familiar with the details. But judging by how care workers are treated in general, I fear the outlook is not very positive.
In the end, the elderly person just sits there, usually helplessly exposed to these things and to the people involved. I think it’s great that, in a welfare state, so much has been made possible for children and their young parents, and of course there is still room for improvement. I would also wish for the same level of support and consider it equally necessary for our older generation. Eventually, we all reach that stage, more or less healthy, and not everyone seems truly aware of that.