B
Bornheimer15 Aug 2019 10:48Hello everyone,
I am about to take on a very large project (voluntarily) and would appreciate hearing different opinions.
[SITUATION:]
My grandmother (86) owns a 2,300m2 (approximately 25,000 sq ft) plot of land near Frankfurt. Her two daughters will eventually inherit it, but the relationship among the three of them is poor. I am the grandson (31) and get along well with my mother and, uniquely, very well with my grandmother. I am the only one who visits her weekly, does her shopping, and takes care of things for her.
Since my mother and aunt are estranged and unable to handle this inheritance, I am currently considering “stepping in.” Neither my mother nor my aunt could buy out the other, and both would be overwhelmed by such a large property. Selling the entire property is generally ruled out by everyone. That is where I come in, as I would like to take over the whole thing. My mother intends to gift me her share because she wants nothing to do with it. I have not yet spoken with my aunt about this, but that will happen soon. My grandmother approves of my plan since I have been helping maintain the property for years and she knows it would be in good hands with me.
About the property/house:
2,300m2 (approximately 25,000 sq ft), within a short driving distance to Frankfurt. The land can be divided into three parts:
[IMPLEMENTATION]
This is where the challenge lies. I divide my plan according to the property parts. The timelines are short-, medium-, and long-term.
[Part 1 (2019–2021):]
My grandmother wants to gift me Part 1 this year—the meadow. The value is just under 200,000 euros (approximately $215,000), which would be below the inheritance tax threshold for me as a grandson. I would like to build a house with three apartments and rent them out. Since my grandmother’s health is still relatively good, my plan is to build equity with this house until she passes away. Currently, my wife and I can save 15,000 euros (approximately $16,000) per year, which we could invest in this project. Additionally, during this period, my wife will receive a payout from her brother, amounting to 50,000 euros (approximately $54,000). So we already have some equity, including the land itself.
[Part 2 (after my grandmother’s passing):]
Once my grandmother has passed, I would have to buy out my aunt. This will certainly be a significant financial challenge. I would then rent out my grandmother’s two apartments. The local rent rate is about 8 euros (approximately $8.50) per square meter.
[Part 3 (financially dependent):]
The listed barn is my big dream home. I would love to renovate it and live there myself. Being nearby would also make managing and maintaining the property easier. However, this will require a substantial amount of money. Despite available tax benefits for historic properties, this will probably not be easy right after taking out a loan to buy out my aunt.
What do you think? Does it make sense for me to have Part 1 transferred to me now so I can start immediately? Or should I hold off, continue saving, and be prepared to buy out my aunt later? However, if my aunt does not cooperate, this could cause major problems. Inheritance tax is also an important factor given the size of the property. In two weeks, my grandmother plans to speak with her daughters about what they want to do. There are actually no plans yet for the entire property; the three have never really discussed it. I will openly present my idea to all parties. If you have any further suggestions (including tactically smart ways to deal with inheritance tax), I would be very grateful. By the way, the inheritance tax issue is what set this whole process in motion. I want to find a good solution here. My mother and aunt have so far avoided the topic, which I consider highly irresponsible given the asset’s value. Last but not least, I have a sister who supports my plan and currently makes no claim to the property.
Thank you
Bornheimer
I am about to take on a very large project (voluntarily) and would appreciate hearing different opinions.
[SITUATION:]
My grandmother (86) owns a 2,300m2 (approximately 25,000 sq ft) plot of land near Frankfurt. Her two daughters will eventually inherit it, but the relationship among the three of them is poor. I am the grandson (31) and get along well with my mother and, uniquely, very well with my grandmother. I am the only one who visits her weekly, does her shopping, and takes care of things for her.
Since my mother and aunt are estranged and unable to handle this inheritance, I am currently considering “stepping in.” Neither my mother nor my aunt could buy out the other, and both would be overwhelmed by such a large property. Selling the entire property is generally ruled out by everyone. That is where I come in, as I would like to take over the whole thing. My mother intends to gift me her share because she wants nothing to do with it. I have not yet spoken with my aunt about this, but that will happen soon. My grandmother approves of my plan since I have been helping maintain the property for years and she knows it would be in good hands with me.
About the property/house:
2,300m2 (approximately 25,000 sq ft), within a short driving distance to Frankfurt. The land can be divided into three parts:
| Part 1 About 650m2 (approximately 7,000 sq ft) Garden with apple trees | Part 2 About 850m2 (approximately 9,150 sq ft) Residential house (built in 1966), two apartments each 100m2 (approximately 1,075 sq ft). Very solid condition, basement, new heating system, annual maintenance work | Part 3 About 800m2 (approximately 8,600 sq ft) Old sandstone barn (historic monument), good condition, garage, large paved courtyard. Everything in very good condition |
[IMPLEMENTATION]
This is where the challenge lies. I divide my plan according to the property parts. The timelines are short-, medium-, and long-term.
[Part 1 (2019–2021):]
My grandmother wants to gift me Part 1 this year—the meadow. The value is just under 200,000 euros (approximately $215,000), which would be below the inheritance tax threshold for me as a grandson. I would like to build a house with three apartments and rent them out. Since my grandmother’s health is still relatively good, my plan is to build equity with this house until she passes away. Currently, my wife and I can save 15,000 euros (approximately $16,000) per year, which we could invest in this project. Additionally, during this period, my wife will receive a payout from her brother, amounting to 50,000 euros (approximately $54,000). So we already have some equity, including the land itself.
[Part 2 (after my grandmother’s passing):]
Once my grandmother has passed, I would have to buy out my aunt. This will certainly be a significant financial challenge. I would then rent out my grandmother’s two apartments. The local rent rate is about 8 euros (approximately $8.50) per square meter.
[Part 3 (financially dependent):]
The listed barn is my big dream home. I would love to renovate it and live there myself. Being nearby would also make managing and maintaining the property easier. However, this will require a substantial amount of money. Despite available tax benefits for historic properties, this will probably not be easy right after taking out a loan to buy out my aunt.
What do you think? Does it make sense for me to have Part 1 transferred to me now so I can start immediately? Or should I hold off, continue saving, and be prepared to buy out my aunt later? However, if my aunt does not cooperate, this could cause major problems. Inheritance tax is also an important factor given the size of the property. In two weeks, my grandmother plans to speak with her daughters about what they want to do. There are actually no plans yet for the entire property; the three have never really discussed it. I will openly present my idea to all parties. If you have any further suggestions (including tactically smart ways to deal with inheritance tax), I would be very grateful. By the way, the inheritance tax issue is what set this whole process in motion. I want to find a good solution here. My mother and aunt have so far avoided the topic, which I consider highly irresponsible given the asset’s value. Last but not least, I have a sister who supports my plan and currently makes no claim to the property.
Thank you
Bornheimer
Is it even possible to build three apartments on section 1? It’s called "meadow" for a reason. From a setback perspective, it also looks very tight...
I’ve also heard that gifts made in the last 10 years are taken into account for inheritance. Since you are the grandson, I’m not sure how that applies in your case.
And is the conversion of the listed barn into a residential building even permitted?
I’ve also heard that gifts made in the last 10 years are taken into account for inheritance. Since you are the grandson, I’m not sure how that applies in your case.
And is the conversion of the listed barn into a residential building even permitted?
B
Bornheimer15 Aug 2019 11:38Hello Basti,
Building on the meadow is possible. It is indeed a narrow plot; after deducting the mandatory 3 meters (10 feet), only about 9 meters (30 feet) remain. However, the neighboring houses do not have windows. A friend who is an architect already told me that a boundary wall might be possible here, and the 9 meters (30 feet) would also not be an issue.
Regarding the barn, I’m not sure yet... that is still far off, and I haven’t contacted the heritage authority yet.
Building on the meadow is possible. It is indeed a narrow plot; after deducting the mandatory 3 meters (10 feet), only about 9 meters (30 feet) remain. However, the neighboring houses do not have windows. A friend who is an architect already told me that a boundary wall might be possible here, and the 9 meters (30 feet) would also not be an issue.
Regarding the barn, I’m not sure yet... that is still far off, and I haven’t contacted the heritage authority yet.
There are many ifs and buts here! When such a large amount of money is involved, in my opinion, it doesn’t make sense to debate the planning at this stage.
Discussions like these should only happen once the financial matters within the family are clearly settled. Just wait—once your aunt finds out that your grandmother wants to give you “1,” there will be pressure on your grandmother. This can even lead to claims like “Grandma is very old and not fully coherent anymore,” and that she needs a legal guardian.
I understand that you’re making plans and thinking things through—that can definitely be enjoyable—but it’s still too early to put this up for discussion now.
Discussions like these should only happen once the financial matters within the family are clearly settled. Just wait—once your aunt finds out that your grandmother wants to give you “1,” there will be pressure on your grandmother. This can even lead to claims like “Grandma is very old and not fully coherent anymore,” and that she needs a legal guardian.
I understand that you’re making plans and thinking things through—that can definitely be enjoyable—but it’s still too early to put this up for discussion now.
In my opinion, it is important to proceed very carefully here. Otherwise, you can quickly get drawn into this conflict. The primary goal should be to resolve the conflict openly and without predetermined outcomes, if that is even possible. Perhaps involving a professional mediator could be helpful.
What is your relationship like with your aunt? Your plan includes, among other things, reducing her share of the inheritance. Some people might misunderstand this. I would try not to overwhelm her with your plan and hold back on it for now. First, I would listen to and try to understand her wishes and motives.
Additional questions:
- What about the buildability of the property? Is there a zoning plan / building permit?
- Basti has already mentioned something regarding the narrow plot.
What is your relationship like with your aunt? Your plan includes, among other things, reducing her share of the inheritance. Some people might misunderstand this. I would try not to overwhelm her with your plan and hold back on it for now. First, I would listen to and try to understand her wishes and motives.
Additional questions:
- What about the buildability of the property? Is there a zoning plan / building permit?
- Basti has already mentioned something regarding the narrow plot.
I have to agree with Zaba on this. As a family, you should first clarify the inheritance matters. Another thing I’ve noticed is that you are only planning for the payout from your aunt. Don’t forget about your sister — unless otherwise specified in an inheritance agreement or will, according to the legal order of succession, you are entitled to only half of your mother’s share after your aunt’s payout. Your sister might not be interested in managing the property herself, but she definitely won’t "gift" her share to you; she may need the money for her own plans.