Building on the parents' property

Hello Tobias,

if there is enough space, divide the building plot or take the undeveloped free plot right away. Building on the (economically used) property of the mother sounds initially tempting, but it involves various pitfalls on the tax side and also regarding financing incl. later (permanent) change of owners. Such a construction would only be chosen if it is the last and only option to realize the construction from a tax and construction perspective.

From your description, however, you have other (and probably better) options available, which you should discuss in cooperation with the architect/surveyor and tax advisor. Dividing the plot is of course not free, but it offers legal certainty for all parties and is therefore probably sensible after all.

Best regards
Dirk Grafe

Hi,

we did it similarly, namely with my grandma's large property. Our property was surveyed and then divided with a new land register sheet, etc., and then transferred to me via notary so that I am listed in the land register. It only cost us the surveying fees, notary, and district court, but the total value of the 610m² property was only 21,000 euros, so I don't know if additional costs arise with a higher value. I would also say that you should first meet with a notary or someone similar to clarify which solution makes the most sense for you.

I would only start building once the ownership situation is officially clarified, so that there are no disputes later between your parents and you and you don't end up with a house on a property that doesn't belong to you.

Thank you first of all for your opinions! I had hoped to somehow avoid the division, but apparently there is hardly any meaningful alternative on the table. We will also discuss it again with the tax office.

I had hoped to somehow avoid the division [...]

Let me put it this way: the added value that the division offers, or what kind of mess you (probably) would get into if you don’t separate it properly, isn’t obvious to laypeople at first glance. If you were to build on the mother’s property, it is not even guaranteed that it would be cheaper cost-wise, because then other (consequential) costs will surely arise – for example, for easements, additional entries in the land register, etc., and so on.

I would still approach it with an open mind; it is at least not impossible that the tax advisor will come up with a solution that delivers what you want and works without division. Consulting specialists is, however, indispensable here and also does not mean a great effort. From comparable cases in my practice, you present 1-2 variants as plans to the tax advisor, discuss them by phone in 5-10 minutes, and then the best solution with or without division is on the table.

Best regards Dirk Grafe

Hello Tobias

What I have been wondering all this time is why you want to build your house on the property of the restaurant? As the construction expert has already written, that would involve many compromises.

Since there is still a third property available, wouldn’t that be an option for you?

The third part can then be sold, encumbered, or retained. Offering a part of the restaurant property to a third party/stranger for purchase will probably be more difficult, so one point of consideration will be not to use the freely tradable third property oneself initially or only to do so if the BV on the restaurant property cannot be realized under any circumstances.

Best regards
Dirk Grafe