2 buyers - 1 property - different amounts of money - owner?

Thank you very much for all the hints and thoughts! Excluding a partition auction is therefore sensible for the project.

- A buys the house and lets B live there for free. If necessary, with a right of residence or fixed rental contract. Everyone is happy.
- B buys the house and A pays everything. Then the tax won’t bother him either.

1. A cannot afford the property alone
2. If B buys the house, then he is also paying for it, otherwise A would buy the house. But if A pays and B becomes the owner, it would be a gift that would trigger gift tax.

There is one notice from the municipality. Who pays it doesn’t matter to the municipality at all.

Aha. The notice goes to whoever has the majority of the shares?
But the tax office is interested in who pays, otherwise gifts would occur with every payment.

No. He simply stops paying the loan.

Okay, then a right of first refusal for the respective other shares must be granted to the respective other owner.

- B suddenly dies
- A and B fall out
- A becomes insolvent and wants/must convert his real estate assets into cash
- After 10 years A no longer wants to support B financially
- B goes into personal bankruptcy.

Then A either takes over the loan or loses the property if he cannot handle it. But this problem always exists if one cannot afford the property alone. The same applies to disputes or insolvency. However, B could have saved money for a long time while being supported. Personal bankruptcy is a good tip. Then a right of first refusal must be agreed for the respective other party.

What’s the problem if A buys and lets B live there rent-free? Problem solved. Thread could be closed.

A doesn’t have enough money on his own.

That doesn’t work so easily with loans. Either everyone finances alone and is solely liable – that’s a bank problem with the mortgages. Or they are jointly liable, then they can also take out a joint loan right away.
Please properly separate “taking out a loan” and “liability” and “who repays”.

Yes, that’s how I understood it too. Both are liable for the joint loan, but repayment can be done by person B and thus acquire more shares.

Oh yes. If B only gets a small share of the property in the land register, why should B then repay 100% of the loan?

B gets as many shares as the loan amount is. With a loan amount of €100,000 repaid solely by B, B gets shares worth €100,000.

Then financing will probably be out of the question. Unless B is very old.

B is not old. Part should be financed. Why should financing be out of the question?

Unfortunately, it’s not: he who repays stays. The one with the majority of shares in the land register remains, or the one who is more liquid and can pay out the other in case of doubt.

Interesting. Could B also say I sell my shares for 1 million euros – he could even claim that person C is offering that, although it’s not true. And person A would not want to afford that because the price is way too high.

But certainly that works. Money is just paid out as leverage so one leaves the land register and that’s it. If person A waits a few years, he ruins person B.

If person A waits a few years, person B can still live there as desired. Where is the ruin in that?

Isn’t it a bit weird to talk about yourself in the third person?

That makes it easier to make it clear.

1. A cannot afford the property alone
2. If B buys the house, then he is also paying for the house, otherwise A would buy the house. But if A pays and B becomes the owner, it would be a gift that would trigger gift tax.

If it’s only 95/100 to 5/100 in your division - see the initial posts, then A can also afford the house alone. The 5% cannot be a knockout criterion. To make it fair, A buys 100% and B pays a very small rent. Then A has enough money to pay the remaining share and becomes sole owner. For B it is basically compensation for use or his share in monthly installments.

Aha. The notice goes to the one with the most fractions?
But the tax office is interested in who pays, otherwise there would be gifts with every payment.

No, the notice goes to both at the same time. The tax office initially does not care who paid for the house. It is irrelevant for real estate transfer tax as well as ongoing property taxes. A and B are each liable for the aforementioned costs to 100% regardless of their ownership shares.

OK, then a right of first refusal of the respective other shares is granted to the respective other owner.

Right of first refusal means that A or B can each enter into an existing purchase contract. He cannot simply buy it like that. Unfortunately, that is what the Building Code says - and there will not be a sale of X% of a property. Nobody is stupid enough to sign such a contract.

Yes, that’s how I understood it too. Both are liable for the joint loan, but repayment can be done by person B and thus acquire more shares.

Shares of what? Ownership is already registered in the land register with x/100 and y/100. If you want to change anything about that, a notary is mandatory. There are no shares in the loan. I already told you that. B acquires exactly 0. Or rather nothing at all. Nada.

B is not very old. Part of it should be financed. Why should financing be excluded?

As long as a right of residence for B is entered in the land register. That makes the property unpledgeable.

Interesting. Could B also say, I sell my shares for 1 million euros - he could even claim that a person C would offer that, although that is not true. And person A would not want to afford that because the price is way too high.

You can say a lot. And if you think for three seconds, you know that B is just bluffing and/or talking nonsense.

If A cannot buy alone, A should have B give the (few) missing funds as a gift. Then buy 100% themselves and record the "gifted" money as rent in advance. At 5% there will probably be no gift tax.

If A cannot buy alone, A should have B gift the (small) amount of money that is missing.
Then buy 100% yourself and record the "gifted" money as rent prepayment.

At 5%, there will probably be no gift tax.

Or give it officially as a loan and offset the loan repayment with rent.

I don't understand this... how much money does A have and how much money does B have? How much income is person A missing in order to finance the house alone? That is then the amount that must be charged as rent from person B. (Don't forget reserves, etc.).

Regardless of that, you can start transferring shares to person B. Once as much as the person currently has + €20,000 gift every 10 years.

For even more chaos, I'll throw the word rent-to-own into the ring.

Thank you very much for the interesting suggestions and remarks.

Or officially grant it as a loan and offset the loan repayment with rent.

Loans have to be taxed at 5.5%, which would be the worst solution. It would be better to take out a higher loan from the bank at 3.85%.

If it only goes 95/100 to 5/100 in your division – see initial posts – then A can also afford the house alone. The 5% cannot be a deal-breaker. To keep it fair, A buys 100% and B pays very little rent. Then A has enough money to pay the remaining share and becomes sole owner.

There should be no rental income generated that would have to be taxed again. It should be kept as simple as possible from a tax perspective.

No, the notice goes to both at the same time. The tax office is initially not interested in who paid for the house. It is irrelevant for both the real estate transfer tax and the ongoing property tax charges. A and B are each liable for the above costs regardless of their ownership shares to 100%.

Okay, I didn’t know that. But in the second step, the tax office is of course interested. If person B pays half of the property taxes, then person B is giving money to person A, which would trigger gift tax. At least from €20,000. But one wants to avoid keeping track of all that. So everyone pays their property tax shares proportional to their fractions to the tax office.

A right of first refusal means that A or B enters into an existing purchase contract. They cannot just buy like that. Unfortunately, that’s how it is stated in the Building Code – and a sale of more than X% of a property will not exist. No one is foolish enough to conclude such a contract.

So person C must have first concluded a purchase contract with, for example, person B. Then this must be presented to person B, who can then say that person A pays the amount? Couldn’t person B, if they want to annoy person A, set an utopian high amount in the purchase contract?

Fractions of what? The ownership is already registered in the land register with x/100 and y/100. If you want to change something about that, a notary is mandatory. There are no fractions with the loan.

Exactly, the loan is then not credited 50/50 because it is assumed that only person B is repaying it. Thus, person B then receives the full loan amount as fractions. So this is agreed in advance in the purchase contract for the property – not afterwards. Otherwise, a notary would be required again and again, logically.

Provided a right of residence is granted to B in the land register. That makes the property unpledgeable.

We hadn’t thought about a right of residence yet – then rent would be due (which we want to avoid). We would then grant both a lifelong right of residence. It’s not mandatory to live there. Or would that then be a second residence if, for example, person A lives elsewhere – but also has a right of residence in the property?

One can say a lot. And if you think for three seconds, you know B is just bluffing and/or talking nonsense.

It is more about the risk that someone can then cause problems for the other. Then the other might not be able to purchase the shares because the price is set way too high. And then someone else gets the shares who only causes trouble.

Regardless, one can start transferring shares to person B. Once as much as the person currently has money + €20,000 gift every 10 years.

Then you would have to go to the notary every 10 years and have it registered again, which again costs a lot of money. And after 30 years, you would not be much further.

For even more chaos, I throw the word rent-to-own into the ring.

No, something like that would really make it even more complicated. But thanks for the hint.