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.
G
Gerddieter18 Mar 2021 00:47Phew, quite a tough discussion. I don’t understand the big underlying problem...
Where is it written that you have to work towards an equal distribution of a possible future inheritance while the owner is still alive? And preferably grow old modestly so that as much as possible is left behind...
Dad can do whatever he wants with his property! And if he wants you to move in, then just do it! Did the others also get a theoretical offer to move in? Of course they don’t want to because they already have something or live elsewhere.
Keep it simple – if the owner wants it. And the inheritance is divided at the end, based on what is left, not beforehand!
Looking at your perspective – you would be foolish to rent and then, when the inheritance comes, have others come and push you out because you can’t pay the asking price. So buy if possible...
Best regards, GD
Where is it written that you have to work towards an equal distribution of a possible future inheritance while the owner is still alive? And preferably grow old modestly so that as much as possible is left behind...
Dad can do whatever he wants with his property! And if he wants you to move in, then just do it! Did the others also get a theoretical offer to move in? Of course they don’t want to because they already have something or live elsewhere.
Keep it simple – if the owner wants it. And the inheritance is divided at the end, based on what is left, not beforehand!
Looking at your perspective – you would be foolish to rent and then, when the inheritance comes, have others come and push you out because you can’t pay the asking price. So buy if possible...
Best regards, GD
Gerddieter schrieb:
When inheritance comes into play, others will show up and evict you because you can't pay the asking price.That definitely wouldn’t happen with my siblings, but every family is different. The original poster needs to know how things will work out in their own case.H
HilfeHilfe18 Mar 2021 05:55I would buy the house through a standard purchase; that way, there won’t be any issues with the siblings. The father can then decide what he wants to do with his money.
pagoni2020 schrieb:
Does the father leave the house because
a) he wants to anyway (maybe it’s too big, too burdensome, etc.)?
b) especially because he wants to make space for you?
I don’t know the father, but why would he, as the homeowner, suddenly want to live in a one- or two-room apartment? That sounds strange. Throughout the entire thread, I don’t see a single sentence about how the father wants to live. Surely he wants to keep the house in the family, but above all, he should have a comfortable life. If he forgets that, the children should remind him and help make sure he doesn’t forget.
Why not build an extension to the house for the father, essentially turning it into a multi-generational home with assistance or partial care arranged through a notarized agreement? Then the father can stay in the house and be close to his family. We did something similar. We received money and took on responsibility in return. Siblings were fairly considered through a notarized arrangement, and direct payments or a lifetime annuity to the father helped settle things directly. Both a) and b).
Good point, but a renovation or extension of the house is unfortunately not possible; we had already considered that.
Gerddieter schrieb:
Phew, quite a tough discussion. I don’t understand the whole big problem...
Where is it written that you have to work towards a symmetrical distribution of a possible future inheritance while still alive? And ideally grow old modestly so that as much as possible remains...
Dad can do whatever he wants with his property! And if he wants you to move in, then just do it! Have the others also been offered the chance to move in? Of course, they don’t want to because they already have something or live elsewhere.
Just keep it simple—if the owner wants it. And the inheritance is divided at the end, from whatever is left, not before!
From your perspective—it would be foolish to rent in and then when the inheritance happens, the others come and force you out because you can’t pay the requested price. So buy if possible...
Best regards, GD Yes, exactly, that’s how I see it too and that’s how it really is.
If there were a way where everyone would be treated equally as of now, I would of course choose that immediately—but unfortunately, there isn’t.
Therefore, I’m looking for a way to manage this in a reasonably fair manner.
Patblue schrieb:
Therefore, I am looking for a way to handle the whole situation reasonably fairly. There won’t be a solution that satisfies everyone, as someone will always feel disadvantaged in some way.
In my opinion, the cleanest approach is for you to buy the house at its estimated value directly, and for your father to use the money as he wishes.
Perhaps he might gift some funds to his children beforehand, which you could add to your own capital.
Otherwise, sooner or later the issue will repeatedly come up again, even among siblings.