LBS Riester Home Direct 10 Questions

Hello,

I can only advise against Wohnriester and would recommend revoking the contract. The following reasons:

- As soon as you take out the loan, a "fictitious" housing promotion account is created, in which the annually subsidized capital (max. €2100) is invested with an interest rate of 2% until retirement! This should not be underestimated, especially if you take out the loan at a young age and the housing promotion account accrues interest over many years. This results in a considerable sum that you will have to pay tax on in old age. That means you have an additional burden in old age in the form of monthly repayments.

- A house subsidized with Wohnriester must be occupied by the Riester saver. This means that if you want to move in old age (e.g., to a barrier-free apartment), the subsidies received must be completely repaid.

EDIT: you have now addressed exactly these two points

OK then I will revoke it.

I have had a Riester contract Classic S/11 (22) for my wife since 2011 and I would also have to make one so that my wife receives the allowances. We had one child and only had to pay €60 and received €300+154€.
And three years later the second child came, then we received €300+300+154= €754.

I only paid the €60 per year for my wife, for my contract only €20 per month flows in.

Now the 6 years are over, the LBS advisor then lured me into the new tariff, this LBS Riester Zuhause Direkt 10, where I have to pay €96 to receive the full allowances.

And since I mentioned the examples above, I want more flexibility and to do that via a building savings contract.

If I revoke now, do I stay with the old contract? And can I then say I don’t want to pay anything in and just leave it as is until retirement, unless a third child comes where I would do the allowances with that. Is that the best option?

I have an appointment again today and will revoke it for now.

I thought it had been clear for several years that Riester was only bank promotion?! There are only very few special cases where you are better off with Riester than with a [Tagesgeldkonto]. There simply is no Riester product that is worthwhile (for the customer).

There are certainly cases in which a Wohnriester home savings contract can be sensibly used for financing. However, this requires a complete overview and calculation of the topic, which is not easy for a layperson. My recommendation to revoke the contract is mainly based on the fact that you yourself hardly know what you have signed. The various pitfalls of Wohnriester (not only the ones mentioned above) must be fully understood and taken into account; otherwise, it is most likely a losing proposition in the end.

As soon as you draw on the loan, a "notional" housing promotion account is created, in which the annually subsidized capital (max. €2100) is invested with an interest rate of 2% until retirement!

At the start of the loan, the entire subsidized home savings balance also comes into play as the starting amount. The €2100 annually is then added on top during the repayment.

This then adds up to a substantial amount which you will have to tax in old age. That means you have an additional burden in old age in the form of monthly repayments.

The assumption is that income in retirement is lower, meaning the tax burden is lower.

For that, you also have the subsidy today and the current tax advantages. For example, by setting aside only €3600 annually, we received about €1400 extra each year on top (subsidies + tax refunds).

Additionally, you will finish the financing earlier.

But you really have to calculate this individually. High earners and families with many children, I believe, fare pretty well with Wohnriester in certain constellations.

A house subsidized with Wohnriester must be occupied by the Riester saver. That means if you want to move in old age (e.g., to a barrier-free apartment), the received subsidies have to be fully repaid.

Nope. Actually, the following is quite possible:

If the Wohn-Riester user sells the subsidized home and reinvests an amount corresponding to the balance of the housing promotion account in a new home, no detrimental use occurs. Also permissible is the acquisition of a lifetime residential right in a senior living or nursing home.

The reinvestment must be made either within one year before giving up the self-use of the previously subsidized dwelling or within four years thereafter.

That results in a considerable amount which you then have to pay taxes on in retirement. That means you have an additional burden in old age in the form of monthly repayments.

The assumption is that income in retirement is lower, meaning the tax burden is lower.

You also benefit from subsidies and today's tax advantages now. For example, if we save only €3,600 annually on top, we receive about €1,400 extra each year (subsidies + tax refund).

In addition, you will finish the financing earlier.

However, this really needs to be calculated individually. I believe high earners and families with many children come off quite well with Wohnriester.

A house funded with Wohnriester must be occupied by the Riester saver. That means if you want to move in old age (e.g. to a barrier-free apartment) the subsidies received must be repaid in full.

No. Actually, the following works quite well:

If the Wohn-Riester user sells the subsidized owner-occupied home and reinvests an amount equal to the balance of the housing promotion account in a new owner-occupied home, no harmful usage arises. Also permitted is the purchase of a permanent right of residence in a senior living or nursing home.

The reinvestment must take place within one year before giving up the self-use of the previously subsidized dwelling or within four years thereafter.