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
pagoni202019 Mar 2021 10:16Your situation is very personal, so some responses might come across as more emotional. In my opinion, a few important questions from you remain unanswered; ultimately, it’s not really my business. Sometimes people develop tunnel vision and lose sight of others’ perspectives. Such a proposed solution can only work if absolutely everyone!! sees a “gain” for themselves, but as it stands, the first problems are already appearing. As I said: $100 can be split easily, but $100,000 is not that simple. Everyone wants as large a share as possible, and I wouldn’t exclude myself from that either. The problems and mistrust are already affecting relationships, as you can see. So – everything is totally “normal” in your case 😀 Maybe it’s showing you that buying a house like this can actually cause a lot of unhappiness.
...which settles the matter. Why are you, the children, assessing the house’s value instead of the parents themselves?
The focus should be on “nice,” “special” for Dad, but here it seems left to chance, “preferably nearby.” That sounds too casual to me...
The other children want a benefit just like you, even if their reasons are exaggerated. I find your approach understandable but also somewhat one-sided.
…not constantly?… but sometimes, when HE thinks it’s necessary. Vaguely regulated situations like this always set off alarm bells for me... It’s either yours entirely or not at all. That’s why I pay properly for my things or simply don’t buy them. Here, it seems many unclear mutual expectations exist... as long as it’s cheap.
That won’t calm things down. Either you think it’s too expensive or the others think it’s too cheap... and Dad ends up in a micro-apartment.
...so why doesn’t he follow through with his own wish through a notary instead of having the children calculate everything up and down? It belongs to him, after all.
“Perfectly fine” is the little sister of terrible (sorry). Why should a homeowner (the father) have to live in a mediocre way in the future? In old age, he will spend most of his time inside the apartment, so it needs to be nice and comfortable for him, with the right size, location, and features. That’s being overlooked here! And... still no answer regarding care/support!!!
“Preferably also nearby” doesn’t sound like a reliable agreement for the father to have security and a sense of belonging in old age through those who benefit beforehand. An advantage is great, but then it should be reciprocal.
Now I’m stunned! Apparently, the house doesn’t belong solely to the father. What does the mother want? She rents? Is she also being consulted? How is she protected? Does she also want to give away large parts of her own security during her lifetime without receiving anything in return? Why don’t the father and mother clarify this first?
So Dad can only afford a “generous” down payment on his condominium because the children are paying later. The mother rents... and all the children will then live in their own houses??? Wow! From my perspective, as a member of the older generation, something feels out of order here. The parents live in small (rental) apartments and appear to be somewhat distant from the children. How can you already want to divide the parents’ inheritance while both are still alive and do not seem well protected?
Problematic for whom? That would simply be correct! For me, it means that Dad and Mom wouldn’t have to worry in old age. In my environment, a father in a similar situation was often found on the terrace crying because this was never how he imagined things. I don’t want to attack you personally, please don’t misunderstand me, but rather encourage you to step out of your tunnel vision. It’s enough that the wealthy brother is already in it. I find the idea inappropriate in this known situation because the two parents should be cared for first, in secure living arrangements, before the younger generation starts sharpening their knives. But I haven’t read much about that here.
Patblue schrieb:
Unfortunately, I don’t think we can all agree amicably on a market value.
...which settles the matter. Why are you, the children, assessing the house’s value instead of the parents themselves?
Patblue schrieb:
The move to a 1-2 room apartment
The focus should be on “nice,” “special” for Dad, but here it seems left to chance, “preferably nearby.” That sounds too casual to me...
Patblue schrieb:
What to make of that is another question...?
The other children want a benefit just like you, even if their reasons are exaggerated. I find your approach understandable but also somewhat one-sided.
Patblue schrieb:
and he also won’t constantly “interfere” with us.
…not constantly?… but sometimes, when HE thinks it’s necessary. Vaguely regulated situations like this always set off alarm bells for me... It’s either yours entirely or not at all. That’s why I pay properly for my things or simply don’t buy them. Here, it seems many unclear mutual expectations exist... as long as it’s cheap.
Patblue schrieb:
That’s why, in my opinion, it’s all the more important to get a professional appraisal/opinion from a third party about the house’s value.
That won’t calm things down. Either you think it’s too expensive or the others think it’s too cheap... and Dad ends up in a micro-apartment.
Patblue schrieb:
The wish comes both from us and from my father.
...so why doesn’t he follow through with his own wish through a notary instead of having the children calculate everything up and down? It belongs to him, after all.
Patblue schrieb:
The move to a 1-2 room apartment (preferably also nearby) is perfectly fine with him.
“Perfectly fine” is the little sister of terrible (sorry). Why should a homeowner (the father) have to live in a mediocre way in the future? In old age, he will spend most of his time inside the apartment, so it needs to be nice and comfortable for him, with the right size, location, and features. That’s being overlooked here! And... still no answer regarding care/support!!!
“Preferably also nearby” doesn’t sound like a reliable agreement for the father to have security and a sense of belonging in old age through those who benefit beforehand. An advantage is great, but then it should be reciprocal.
Patblue schrieb:
There is also a mother (living in a rental apartment), and the two are separated.
Now I’m stunned! Apparently, the house doesn’t belong solely to the father. What does the mother want? She rents? Is she also being consulted? How is she protected? Does she also want to give away large parts of her own security during her lifetime without receiving anything in return? Why don’t the father and mother clarify this first?
Patblue schrieb:
That means everyone would get half from a possible house sale, which should at least be enough for a generous down payment on my father’s apartment.
So Dad can only afford a “generous” down payment on his condominium because the children are paying later. The mother rents... and all the children will then live in their own houses??? Wow! From my perspective, as a member of the older generation, something feels out of order here. The parents live in small (rental) apartments and appear to be somewhat distant from the children. How can you already want to divide the parents’ inheritance while both are still alive and do not seem well protected?
Patblue schrieb:
It would only be problematic if the house is really valued very high.
Problematic for whom? That would simply be correct! For me, it means that Dad and Mom wouldn’t have to worry in old age. In my environment, a father in a similar situation was often found on the terrace crying because this was never how he imagined things. I don’t want to attack you personally, please don’t misunderstand me, but rather encourage you to step out of your tunnel vision. It’s enough that the wealthy brother is already in it. I find the idea inappropriate in this known situation because the two parents should be cared for first, in secure living arrangements, before the younger generation starts sharpening their knives. But I haven’t read much about that here.
I haven’t yet understood from the response why it is so important to the father that the house stays within the family. It shouldn’t matter to him once he has moved into his new apartment – so why does it? This motivation should be examined.
If the father still has a long and good life after moving, instead of handing over the house only on his deathbed, his children should all be happy for him rather than jealous of who makes better use of his talents (I’m not well-versed enough in the Bible to say exactly where it’s written – but it’s in that very old book, so this is not a “new” problem specific to your family). With siblings like these, I’d call the dog catcher to take them to an orphanage. Seriously, distant relatives like that are still too valuable when given away for free. The sibling dreaming of the property’s increase in value should get the house, and the other siblings should be paid out based on the fictional million – bet that’s not what they actually meant?
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
If the father still has a long and good life after moving, instead of handing over the house only on his deathbed, his children should all be happy for him rather than jealous of who makes better use of his talents (I’m not well-versed enough in the Bible to say exactly where it’s written – but it’s in that very old book, so this is not a “new” problem specific to your family). With siblings like these, I’d call the dog catcher to take them to an orphanage. Seriously, distant relatives like that are still too valuable when given away for free. The sibling dreaming of the property’s increase in value should get the house, and the other siblings should be paid out based on the fictional million – bet that’s not what they actually meant?
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
icandoit schrieb:
As siblings, I would feel quite tricked.No need for jealousy. Isn’t it natural to want to support your brother or sister?
If the property is shared, either everyone would have to move into the house, which would probably cause space issues, or the house would be sold and everyone would be compensated.
However, I wouldn’t sell my parents’ house. Memories and a sense of home are surely worth more than some paperwork.
Siblings can always come over for coffee, and with a little sibling love, I’m sure an agreement can be reached.
Bardamu schrieb:
No envy, please. Wouldn’t you wish that for your brother or sister? What I mainly meant was: doesn’t the brother begrudge the father that the moving company isn’t the Grim Reaper? – because, logically, this "luxury problem" only arises during the time between moving out and the inheritance, when an increase in value can even occur. Some people, when they sense a chance to be jealous, have such a cold heart that they don’t even realize they should turn on their brain before thinking. If I were a pastor, the next sentence would have to be: “they deserve our special prayers” ;-)
https://www.instagram.com/11antgmxde/
https://www.linkedin.com/company/bauen-jetzt/
P
pagoni202019 Mar 2021 13:57Bardamu schrieb:
No need for envy. Would you not wish the same for your brother or sister? If that’s the case for you, I sincerely congratulate you! It doesn’t have to be a matter of spiteful envy. Imagine your parents give you €50 (about $55) at Christmas, and your brother next to you receives €100 (about $110). It’s not about the small financial difference—if you feel uncomfortable about it, money is just the background—but it would feel the same if it were €90 (about $100) and €100 (about $110).
As a father, I would ask myself why I am favoring one of my children. That’s exactly what I do NOT want to do, not only financially.
Bardamu schrieb:
Siblings can always come over for coffee and, besides that, they should be able to agree on this with some sibling love. The father stays living in the house, and the brother receives €100,000 (about $110,000) more from the father, while the sister is expected to be happy just when she occasionally gets to ride along as a passenger in his new Porsche. That should be enough "sibling love," shouldn’t it?
11ant schrieb:
What I mainly meant was: the brother doesn’t want the father’s movers to be the Grim Reaper, right? Exactly! Time and again, I read about such arrangements where an inheritance is planned during the lifetime if it suits the heirs, and the "old folks" are simply forgotten or only barely considered. You can even look up the meaning of the word "inheritance" on Wikipedia; everyone has a smartphone nowadays.
There is also a simple and obvious option: all siblings could come together to support their father staying in his own house (which he is so attached to). Is the house too big for him? Great. Each child sets up their own room there and visits Dad regularly; even better for the grandchildren. Grandpa sits in the garden chair, enjoying the sight of his family taking care of the garden or playing in his well-maintained yard, able to stay there overnight anytime.
I know this old-fashioned idea may sound strange to some, but to me, it truly means living family values and social behavior within the family.
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