Hire purchase within the family (with ownership share?)

Hello everyone,
here is now my third contribution regarding this property and a question about the possibilities of a rent-to-own purchase due to lack of equity.
Brief summary of the current situation: The house belongs to a community of heirs consisting of my mother and her two siblings. We have been living in the house for 7 years now. Initially, we took care of my grandfather and since his death have borne all costs including property tax etc. – in return, we are allowed to live there. I just recently finished my studies, so before that we were not able to take over the house. But even now it’s (still) not possible, since we have no equity and I am initially on a fixed-term contract. Nevertheless, the thoughts about it are becoming more concrete and that’s when the question of a rent-to-own model came into play. Our desire to act promptly is especially related to the backlog of renovations and the associated significant operating costs – reducing these through investments only makes sense when we actually invest in "our own property."

The idea: In the future, we pay a purchase price to the three legal owners over, for example, 10 years in the form of a monthly "rent" within the framework of a rent-to-own contract. This rent will be fully credited towards the purchase price. At the end, a final installment is due.
From what I understand so far, the following points need to be considered:
- If no option to purchase is made, the property transfer tax for the shares of my uncle and aunt must be paid by us upon notarization of the rent-to-own contract; in the case of an option purchase, the payment of the property transfer tax would be postponed until the option is exercised.
- Since we bear all costs, the community of heirs has no rental losses, so it should not be a problem if the tax office considers the whole thing to be a hobby activity and they cannot declare any advertising expenses for tax purposes – however, we cannot claim the property tax ourselves for tax purposes either, since during the "rent-to-own phase" we are not the legal owners (and actually would not have to pay the property tax as we do now?!).
- We should register a priority notice of conveyance (Auflassungsvormerkung) in the land register so that in the event of financial difficulties of the community of heirs we do not suddenly stand there without any claim to the house despite having made payments.

Is there not an (easy) way for us to become legal co-owners of the house through the monthly payments? To essentially "buy into" the community of heirs? That would significantly reduce the risk of the whole matter. For example, if in 5 years the case occurs that we do not want to buy the house after all but would have already paid 40% of the purchase price, then we would also be entitled to 40% of the sales proceeds if it is sold to third parties.

In a classic rent-to-own model, such a thing is certainly totally uninteresting for the seller – but here it is a sale within the family. The owners have no expenses but currently still have to wait quite a while for income from their inheritance. With a rent-to-own or "share purchase" model like this, all parties would come a bit closer to the goal. Provided we would agree on such an arrangement, it would of course also have to be regulated legally, fiscally, etc. in some form. Does anyone know of any possibilities?

- If no option to purchase is made, the real estate transfer tax for the share of my uncle and aunt is to be paid by us upon notarized conclusion of the hire purchase agreement; in the event of an option to purchase, the payment of the real estate transfer tax would be deferred to the time when the option is exercised

That is correct.

- Since we bear all costs, the community of heirs has no rental losses, so it should not be a problem if the tax office considers the whole thing as a hobby and they cannot declare advertising expenses on their taxes – but we cannot claim the property tax on our taxes either, because we are not the legal owners during the "hire purchase phase" (and should actually not have to pay the property tax yet as is the case now?!)

Whether you are tenants or owners – you pay the operating costs including property tax anyway. Only as owners are you also responsible for maintenance. Since you mention the property tax, it should actually be seen neutrally. As tenants it is only part of the ancillary costs, as landlords both income and advertising costs = no tax effect.
The community of heirs can still have significant losses from rental and leasing if maintenance and repairs have to be paid (as landlords).

- We should register a priority notice of conveyance (Auflassungsvormerkung) in the land register so that in case of financial difficulties of the community of heirs we don’t suddenly stand without any claim to the house despite having made payments

That should always be part of a hire purchase/option to purchase. Nothing without a priority notice and the associated blocking of the land register.

Isn’t there (a simple) way for us to become legal co-owners of the house through the monthly payments? To “buy into” the community of heirs, so to speak? That would significantly reduce the risk of the whole matter. For example, if in 5 years the case arises that we do not want to buy the house after all but have already paid 40% of the purchase price, then we would also participate with 40% in the sales proceeds if it is sold to third parties.

Only by private agreement. If someone does not comply, you would have to sue and hope to win. In the case of an estate, it can look different – I am totally unsure if, for example, a third party is appointed sole heir.

Does anyone know of possibilities here?

Go to a tax advisor and notary. They are the right contacts. Here there are only lay opinions and no binding legal advice.

A really dumb question from a layman. Why so complicated? Couldn't you simply take up the purchase price as a private loan (with or without interest) from the current owners and thus acquire the house immediately? This loan could also be considered virtually, namely that you pay a monthly installment until full repayment. Such a thing can certainly be legally and notarially recorded correctly, if possible.

If the owners let you live rent-free for 7 years, that was already a big concession. As tenants, you would have had to pay the ancillary costs anyway. Every option has advantages and disadvantages, but if it depends on the property tax, then the financing is already very tight. If you pay higher rent, it must be taxed by the owners; in return, they can deduct the renovation costs. Whoever pays the renovation costs and needs a loan for that, perhaps the mother would be willing to gift/sell her share, and many other questions. This must be discussed with the tax advisors of all parties involved and a notary based on the risk tolerance of each individual.

A really stupid question from a layperson. Why so complicated? Couldn't you just take the purchase price as a private loan (with or without interest) from the current owners and acquire the house immediately that way? This loan could also be considered virtually, meaning that you pay a monthly installment until full repayment. Something like that can surely be legally and notarially documented correctly, if possible.

That probably won't work because the house still somehow has to change its owner. In the case of a gift, at least two-thirds of the value would be subject to gift tax.

... but if it depends on property tax, then the financing is already very tight...

No no, that was more a question of understanding. At the moment, the community of heirs could, according to my understanding, still claim it for tax purposes, although we pay it, but if the whole thing were considered a hobby due to a rent-to-own without additional income from the rent, then no one could deduct it anymore – that so far seemed to me the only fairly manageable financial disadvantage of this construction.

That must be discussed with the tax advisor of all parties involved and the notary based on each individual's risk tolerance.

Off to the tax advisor and notary. They are the right contacts. Here, there are only lay opinions and no binding legal advice.

Thanks for the tips, that makes the next step clear for me :)

After I came across life annuity or temporary annuity variants during my research, I thought there might be another structure that could fit the case, which I just hadn’t heard of yet. Maybe something like a partial rent-to-own, where for example, the term of 10 years would be divided into 5 sections of 2 years each and within each section 1/5 of the house would be acquired, and the house would gradually pass into our ownership.
We would start renovation measures very soon, for example, and also pay for them – if then unforeseeable changes occurred and the house was sold to a third party, we would at least be involved in the sales proceeds, which hopefully would be somewhat higher due to the value-enhancing measures. Our investments would then be lost only partly, and the co-owners could also benefit from the increase in value.
Or would we necessarily be involved in sales proceeds due to the AV?

This probably won't work because the house somehow still needs to change ownership. In the case of a gift, at least gift tax would be due on 2/3 of the value.

You probably misunderstood that. You are supposed to buy it from the community of heirs, but the money does not flow immediately; rather, in the form of a private loan that the heirs grant you. You then pay the heirs the installments you have planned as rent. How much repayment and how much interest and, consequently, how long, would then be a matter of negotiation.
But how that will look with the tax—I have no idea.