Curious financing idea

I can look it up. I have enough correspondence with the tax office about this. The conclusion is that rent-free living for relatives is not permissible (in the tax sense) and the tax office assumes rent as fictitious rent. This then forms the basis for the outcome of income and expenses. You can perhaps compare it a bit to a non-cash benefit. The self-generated electricity from the photovoltaic system also has to be taken into account and paid to the state.

Where exactly is the non-cash benefit here if I let my parents live rent-free?

Sorry, but please keep such half-truths to yourself. Of course, you can let relatives live rent-free, you just can’t deduct any costs related to the apartment anywhere. But then you don’t need an income and expenses statement either.

Sorry, but please keep such half-truths to yourself. Of course, you can let relatives live rent-free, but of course you cannot deduct any costs associated with the apartment anywhere. But then you also don’t need Anlage V+V.

Sorry, you can gladly inquire at the tax office in Moers. I actually got into a fight with them for this reason regarding my 2015 or 2016 tax return.

Where exactly is the monetary benefit if I let my parents live rent-free?

Read carefully – that was just a comparison. Of course, it is NOT a monetary benefit. But self-consumed electricity must also be taxed.

Sorry, you can gladly check with the tax office Moers. I actually got into a fight with them exactly for that reason regarding my tax return 2015 or 2016.

Read correctly - that was just a comparison. Of course, it is NOT a taxable benefit. But self-consumed electricity must also be taxed.

And precisely this comparison is wrong. With self-consumed electricity, I derive a benefit because I use the electricity myself and thus do not have to buy electricity from others, similarly with the company car that I am allowed to use for private trips and therefore do not have to buy my own car, and where exactly is the benefit when I let my parents live rent-free?

To clarify how we will manage everything now. I thank you for all the suggestions, tips, objections. They have helped us a lot! We will take the mentioned house. We get €390,000 from the bank and €40,000 from the father-in-law. This also covers the renovation. We will rent out the upstairs. But of course, everything will be done in a legal, normal way. The parents will not move upstairs either. Thank you all for everything.

Sorry, you can gladly ask the tax office in Moers. I actually had a conflict with them about my 2015 or 2016 tax return for exactly that reason. Read carefully - that was only a comparison. Of course it is NOT a monetary benefit. But self-consumed electricity must also be taxed.

Well, I work as a tax auditor at the tax office and am hearing about this model (with regard to Germany) for the first time. The correspondence would therefore interest me greatly, as I cannot find any legal basis for it. In the rental to relatives at low or no rent, there is regularly a lack of intent to earn income (total profit forecast). Only the already mentioned peculiarity regarding renting to relatives with the 2/3 rule (if the rent corresponds to 2/3 of the local customary rent, I can claim 100% of the costs, otherwise only proportionally) exists. What I cannot rule out, of course, is an individual case in which the tax office assumed actual rental income (for whatever reason).