Buying the family home - a good idea?

A gift would also be more advantageous tax-wise than an inheritance. I think with a gift you would be under the tax allowance and with an inheritance taxes generally apply?!?

Gift or inheritance doesn't matter at first, the tax allowance for children is currently 400,000€ per child every 10 years.

But isn't there the possibility to arrange that the person who lives in it pays? Best regards

Think logically. You fear that your father will have too little capital to maintain the house and to afford a decent life. If his wife lives longer, she would have a right of residence and probably less pension than him, because the widow's pension might also be counted against her pension.

So should she invest from her pension into a house that belongs to you because she previously waived her inheritance share and where she has a right of residence? She will only do that if she has enough pension to afford it voluntarily or if you do so little on the house that it cannot be done otherwise.

I would just try to do what is obvious to me: rent it out.

There too, the right of residence stands in your way. If you buy the house today for 50,000€ (would you even have the cash? Or is this supposed to be taken as a mortgage on the house!?), that means nothing other than that you invest 50,000€ today and after the right of residence expires you will realize a return that involves many unknowns.

This is nothing other than a high-risk investment.

If instead you invest 50,000€ today in a rental apartment and generate rental income with it, you have an immediate return, although for other reasons I rather advise against single rental properties. But there you would have significantly fewer variables than with your purchase option on your parents' house.

Best regards Dirk Grafe

If the house has a value of about 160k, then no taxes are due in the case of direct inheritance.

This is the typical thing where people unnecessarily scare themselves and believe that the tax authorities or whoever will snatch their inheritance away because they think they are so wealthy. And then so much half-knowledge is going around.

Unfortunately true. And for a maximum of €150, every tax advisor and/or notary can recite this in their sleep, taking at most 1 hour.

Best regards
Dirk Grafe

You are painting the whole thing very dark.

Provided that is clear that he is not getting the parental home for free, then there are possibilities. The problems you mentioned would have arisen at the latest during the inheritance anyway. He would then have to buy out his brother and at worst get a run-down house because the father/stepmother cannot afford the maintenance.

Possibilities that I see, for example: 1. He can buy the house under the condition of lifelong right of residence. That way the father would have money initially. 2. The right of residence does not have to be free of charge, but can be within a range the father and stepmother can afford. In return, Bola79 would have to bear the ongoing maintenance. That probably means extra effort for Bola79, but the house won’t fall into disrepair.

Precisely to explore such possibilities, in my opinion a visit to the tax advisor would be sensible, provided the father is generally willing to sell.

You are painting the whole thing very black.

I am not painting anything black – the idea is simply bad and there are much easier solutions that have the same effect.

Provided that is clear that he does not get the parental home for free, then there are possibilities. The problems you mentioned would also definitely arise at the time of inheritance.

Wrong. And that has to be said clearly. In the event of inheritance, without any investment today (!), he will receive 25-50% of the house, depending on how the situation with the stepmother is resolved.

He would then have to pay out his brother

He has explicitly ruled that out several times and has given reasons.

and in the worst case gets a run-down house because father/stepmother cannot afford the maintenance.

Yes – but then his investment today is €0 instead of €50-80K!? The difference between zero euros and fifty thousand euros ... that should be obvious!?

Possibilities I see, for example: 1. He can buy the house under the condition of a lifelong right of residence. That way, the father would have money initially. 2. The right of residence does not have to be free of charge but can be set within a budget that the father and stepmother can afford. In return, Bola79 would have to cover the ongoing maintenance costs. That probably means additional effort for Bola79, but the house won’t fall into disrepair.

With a purchase price of €50K and a “rent reimbursement” of €208 over 20 years, the €50K would flow back interest-free. The father would only have potential interest gains at the beginning; given the current interest rates, hardly €10K adjusted for inflation comes out, rather about €5K, i.e., one pays a four-figure sum at the notary for a purchase contract in order for the father to make a capital gain of €5K to max €10K over 20 years.

Simply transferring €10K to the father or putting it aside/saving it as an emergency fund saves all the incidental costs and has the same effect!

From the €208, the son would have to maintain the entire house ... notary contract, property transfer tax (!), property tax, garbage collection, building insurance and maintenance of a property from the late 60s/early 70s which, according to his statement, has only had the necessary work done since 1990.

That is utopian.

Exactly to explore such possibilities, in my opinion, a visit to the tax advisor would be sensible, provided the father is even willing to sell.

The problem is that, minus the right of residence, hardly any value remains – the tax advisor can’t perform magic either.

Best regards
Dirk Grafe

Hello again,

so, there was never any fear of any taxes. The gift simply does not come into consideration for the multiple reasons mentioned.

That the stepmother wants to continue living alone in the house after my father's death is, for the reasons stated, practically out of the question. But since you never know what might happen, you don't want to rely on "practically." Therefore, it should be established that if she is actually interested in continuing to live there, it would only be on the condition that she can afford it. That would actually be okay with me.

Of course, I would prefer my father to make a will. But I have already cautiously brought it up several times, and he does not want to because he believes he knows the order of inheritance.

I just wanted to ensure, through the purchase, that my father would have a little more money available – as I said, his pension is actually not bad, he receives more than others who are working, but he still has to tighten his belt – AND I would have made sure that no one later would inherit who is not supposed to, which would also have been in my brother’s interest.

BUT: It is a pipe dream, and from the way it sounds, I would be unhappier with the purchase than if the house eventually has to be sold. I’m going to put the thought to rest for now.

So thanks again to everyone who took the trouble to read my questions and answer so thoroughly. Really great forum with great people.

Best regards Bola