Financing / Subsequent Taxation of Residential Riester

The 20% is an average value that I just assumed... The top tax rate of 45% is applied from an annual income of €250,731. In this income range, any subsequent taxation should no longer play a role ;)

To answer your question regarding the financing components:

BSH-Riester: €150,000 (entire term, 2.15%)
Bank loan: €160,000 (fixed interest period: 10 years, 2.5%)
KFW: €50,000 (1.9%)

Your 1.41% is of course great. Although your (you had presented your financing concept) loans cannot be used by everyone and are therefore only partially comparable. But you had written that yourself.

If you have any helpful tips regarding the financing structure -> always welcome :-D

After all, it is a first-ranking financing with an attached [Bausparvertrag]. That is at least more reasonable than some variants that have come up here. The [Bausparvertrag] portion is just over 40%.

There are [Bausparkassen] that recommend a subordinated [Bausparvertrag] portion of 30-40%. It seems the advisor has at least adhered to that. That shows a bit of foresight with less commission greed than with other offers.

Seen this way, the construction can be quite reasonable in very general terms, although 2x 75TEUR [Bausparvertrag] also have to be saved up first. Personally, I would keep the component as large as necessary but as small as possible.

Judging by the interest rate, the [Kfw] is a 10-year 153er? Right? Please correct if otherwise. Since July 1st, the interest rate has dropped to 1.75%.

The bank interest rate indicates financing over 80% of the [BW], meaning little equity. If I were you, I would check whether the [KFW]-program 124 also comes into question. You might get better conditions for another part of the financing there.

One more thing about the tax rate. In the last 10 years, I had a salary increase of just over 50%, about 35 percentage points of which were due to collective agreements, the other 15% were salary increases based on qualification. Assuming that the collective agreement will continue to develop accordingly until retirement and that qualification will still play a role for at least the next 20 years, it looks like this: Today "eligible for support" 37 TEUR p.a., then at retirement about 140TEUR income, and that without belonging to the well-paid.

The painful top tax rate is currently 42% and is already reached by couples at under 120TEUR. The extra 3% from 250TEUR is just a farce so that the 42% rate does not become so noticeable much earlier. That is not entirely unreasonable if you consider that this tax rate was once as high as 53% less than 20 years ago, currently trending downward. But I would not bet a single euro that it will stay that way.

Hello toxic,

thank you very much for your detailed response.

The BSH provides that we save about €640 (i.e., 2 * €320) for 10 years (BSH becomes eligible for allocation at about 40%). After 2027, €770 per month would then be due for repayment.

Your assumption about the amount of equity is correct. We are at a financing ratio of about 90%.

Thanks for the note regarding the KfW loan. I will speak directly to the bank advisor about program 124 next Monday and ask for their opinion. Do KfW loans actually count as equity? That would have to mean that the interest conditions improve if I finance a total of €100,000 with KfW?

Regarding the tax rate, I only partially agree with you. However, a discussion here is only limitedly helpful, since the participants simply rely on their gut feeling.

Do you both earn exactly the same amount to come to 2x 320 euros? Or how does the advisor arrive at this amount? Please have that explained to you once. I believe that he may be overshooting the mark a bit there.

One piece of advice applies so often in life: as much as necessary, as little as possible. In this sense, in my opinion, you should only pay into both building savings contracts as much as needed to achieve the maximum possible benefit (allowance and tax consideration). Paying in beyond that only makes limited sense (and leads back to the usual issue with repayment substitute services and the associated long period of high interest payments on the full amount).

The maximum Riester subsidy is 2,100 euros per person and year, from which the allowances are deducted. If you tell me both of your annual gross incomes (separately) and existing children, I can go into more detail. Calculating with an example now is not expedient.

If you each pay 320 euros monthly + basic allowance for 10 years, you will have about 2* 40,000 euros together after 10 years, which is somewhat more than the minimum you would have to have. Depending on the building savings contract, 40-50% of the building savings sum, so only about 60-75,000 euros. With this construction, you are aiming significantly too high. The saved part could be put into a higher repayment of the loan, which has the highest interest costs.

Actually, the bank should consider the building savings loan as subordinated within a one-stop financing. At this point, the terms should already improve significantly, since the building society usually goes into subordination. Definitely check this and inquire there about how the collateral structure between the bank and the building society looks in detail!

With the KfW, this cannot be stated precisely. Usually, the KfW is secured by the same land charge as the bank loan. The loan is also granted via this bank. Generally, banks therefore assume the same rank of loans, which then leads to this loan not being considered equity capital. Exceptions with banks may exist, but you could probably count them on one hand nationwide. It makes more sense to negotiate a discount on the KfW conditions. Although this makes significantly less of a difference, some banks sometimes give 10-20 basis points, but classic house banks tend to have a hard time with this. You usually find that with one or another direct bank or loan broker.

Got a PM