House sale from parents to child: Which variant experiences?

Good day,

For several months now, we have been planning to purchase or build property. Due to the current situation with rising financing costs and still high construction costs, a new build has become less attractive for us. An increasingly interesting alternative is the purchase of the parental home. The parents have another plot of land and would then like to build an age-appropriate bungalow with less living space.

In this context, the parental home was appraised by a building expert and a valuation report was prepared. The house, including the land, is valued at approximately 450,000 EUR. This valuation report was created because my parents wanted a valid basis for the value for a possible sale of the house and, in the event of a sale to one of the children, did not want to disproportionately favor or disadvantage the other sibling. My parents and I estimate that some modernizations amounting to around 50,000 EUR would still need to be carried out, so we would deduct these costs from the value according to the valuation report.

However, my sister is not interested in buying the house. Therefore, my parents have provisionally offered that a possible takeover price of the house of 350,000 EUR could be agreed upon within the family, and the other sibling would be appropriately compensated elsewhere due to the lower price.

Now the question is how a possible takeover of the house could be arranged in the most cost-effective and fair way. Especially since my parents, due to the current interest rate situation, had various ideas to reduce possible interest burdens, where only the bank benefits, as my parents have a considerable amount of cash assets available.

First, we found out that in a sale between parents and children, no real estate transfer tax is incurred, only the notary costs.

Framework conditions:

Option 1

100% land register entry child

Takeover price including modernization 400,000 EUR minus child’s equity 180,000 EUR. Thus, 220,000 EUR would need to be financed. Here the question arises whether an installment financing with the parents would also be possible.

Option 2

80% land register entry child and 20% land register entry partner

Takeover price including modernization 400,000 EUR minus equity of child and partner. Thus, 190,000 EUR would need to be financed. Here, for example, a loan would be taken out, which would then be repaid proportionally according to the entries in the land register.

Option 3

80% land register entry child and 20% land register entry parents (this 20% subsequently flows into the estate)

When calculating the takeover price, the portion of the land register entry of the parents is deducted from the value of the property. Thus, the child only has to finance 140,000 EUR with the bank or repay it to the parents via loan.

Without knowing the exact figures ("cash assets with my parents"), it is hardly possible to say anything concrete here. But I assume that your parents have money that they (temporarily and despite the bungalow construction) do not need. Then it makes no sense at all for you to have to go to the bank. It also makes little sense to involve the notary multiple times. So * 100% transfer of the house to you Then it must be clarified what your sister should receive (beyond the assets still held by your parents). Let's assume she is to receive the age-appropriate bungalow plus €50k later, and your parents are broke after the bungalow construction and the world trip. Then you take out * an interest-free loan from your parents in the amount of €50k (or perhaps inflation-adjusted). No bank sees this, and your sister eventually inherits the bungalow and the loan. The loan must of course be due with an appropriate notice period, maybe you have already repaid it before that. Finally, security for your parents is still missing. This can be done via a (land register-secured) * flexible pension payment to the parents which initially amounts to €0 and is only activated if needed (by the parents) (and which must of course also be taken into account in your sister's share). But as I said, I have made a few assumptions here...

Variant 3 only causes problems with the bank and others if at all, then completely. You can also resell/gift the house to your wife and thus avoid her real estate transfer tax. However, for tax purposes, it would be better if the parents rented it to you.

You are mixing a lot of different things here and some things make it unnecessarily complicated:

1. Purchase price and sister:

My sister is not interested in buying the house. My parents have therefore temporarily offered that a possible takeover price of the house of 350,000 EUR could be agreed upon within the family and the other sibling would be adequately compensated elsewhere due to the lower price.

And what is adequate compensation? Stop this nonsense. If the house is worth 450,000€, then this amount should be used. If the parents only want 350,000€, then they should split the 100,000€ equally between the children. That means: sell the house for 400,000€ and pay the sister 50,000€. Then this part is already settled.

2. Loan
Once the purchase price is fixed, you can independently consider whether part or more should be financed as a loan through the parents. Officially with a contract so that in the event of inheritance the debts can be appropriately offset and the sister is not disadvantaged.

3. Ownership rights (land register entry)
Definitely take the parents out!! Does only the child want to buy it now, or the child + partner? I assume they are not married here? I am rather traditionally minded and would always enter 50:50 in the land register for an equal marriage or partnership. Then the partner is also liable for the full loan. Otherwise 100% only the child, but then the partner is also excluded from the loan. I hope the child can afford it alone. Partial repayments etc. always sound nice, but the liability always runs for the full amount, so I am not a fan of that. In the end, everyone invests the same lifetime, that is independent of money.

I can only confirm Tassimat's suggestions.

1. If the parents only want 350,000 for their house, then that is simply the purchase price.
Since the house is obviously worth 100k more, your parents simply pay your sister 50k.
That way, it is fairly divided among you.

2. Financing purchase price:
If your parents actually don’t need cash, it is enough if you just transfer your available cash balance to them and the rest is handled through a private loan between you and your parents.
Installments and duration can be agreed individually.

3. Ownership:
In such a case, I would always make a clear 100% transfer to you.
You can still gift half to your partner at some point.

In fact, the performance by most closely matches the parents' expectations. However, the parents would like to maintain a proportional share in the land register corresponding to the amount of the "credit between child and parents," similar to what a bank would do. The question now is whether private individuals can remain registered in the land register with an absolute value, e.g. 100,000 EUR, or whether an entry in the land register can only be relative, i.e. e.g. specified as 20%.

Furthermore, the variant with the proportional entry of the parents in the land register has the advantage that the child initially has to finance less and later, in the event of inheritance, this share then passes to the child via the estate. This land register entry would therefore be a "silent reserve of the parents" if they needed to access the value during their lifetime due to changing life circumstances.