Multi-generation house construction financing

What is supposed to happen at the notary appointment? The property purchase already? It would be better to first go to the tax advisor and then, after their consultation and sleeping on it twice, go to the notary. If it is initially supposed to be just a consultation, then the notary must of course not advise you on tax matters, but only on the legally possible structures regarding the acquisition and ownership of the property and possibly any real estate to be built on it.

The following is not advice (we are not allowed to give any here) but in the end just the confused thoughts of a pseudonymous forum user on the internet, but possibly still helpful.

If your parents pay for the house construction but are not listed in the land register, that is good for you. Because whoever is listed in the land register owns everything permanently attached to it (and of course the property). Theoretically, your parents then do not even have a right of residence. But it could be interpreted by the tax office as a gift (payments from 10,000 EUR must be reported to the tax office and at least one (if not most) payments to the construction company will probably exceed this amount. If the tax office then takes a closer look, it will probably stumble over the strange ownership structure.

If your parents are also listed in the land register, it is safer for them but not clearer from a tax perspective.

On the other hand, since you are their child, they could gift you up to 400,000 EUR tax-free. That still does not guarantee security for the parents, but probably largely circumvents the tax issues (legally).

In the end, perhaps even a structure where your parents lend you both the money for the house construction, receive a land charge as security in the land register, and in return you pay rent (interest can be deducted) to the parents, is the most tax-efficient, but for that ---> go to the tax advisor.

A brief side note about the loan. My wife and I wanted to be listed as borrowers in the forward loan agreement even though the condominium belongs to my parents. That was no problem until the bank’s audit department received the application. They then rejected it due to immorality. It is apparently considered immoral to incur such high liabilities without having ownership. This happened 1.5 years ago, at a time when interest rates were making huge jumps. For the new application, we would have had to pay an interest rate more than 1% higher. In the end, we solved it by making it a disbursement condition that we are registered as co-owners in the land register.

So it could very well be that your parents will not get the loan (if they need one) unless they are also registered in the land register. The bank advisor didn’t see any problem with this for us, but the audit department ultimately did.

It says above that none is needed (for the house construction).

Yes. How you divide that percentage-wise is up to you, you can look up fractional ownership. But then the gift tax might become a problem if they declare the costs for the house significantly higher than the amount you contribute. A tax advisor can certainly help you better with that.

Super, thank you very much :) I'll look into it further, that was very helpful!

A brief side note about the loan. My wife and I wanted to be listed as borrowers in the forward loan contract even though the condominium belongs to my parents. That was no problem at all until the bank's audit department received the application. They then rejected it on the grounds of impropriety. It is apparently improper to take on such high liabilities without acquiring ownership. This happened 1.5 years ago during a time when interest rates made huge jumps. For the new application, we were then supposed to pay an interest rate more than 1% higher. In the end, we solved it by making the disbursement conditional on us being registered as co-owners in the land register.

So it could well be that your parents will not get the loan (if they need one) if they are not also listed in the land register. The bank advisor saw no problem with that for us, but the audit department ultimately did.

Exactly, as I said, my parents no longer need to take out a loan, they are paying for the house that way. My husband and I only need to borrow the amount for the land (+ garden area). As collateral, the bank has the house + land, which in turn is worth significantly more than our loan. Only this gift tax worries me a little.
Does anyone know why a tax would be due? We would all be listed in the land register, including the donor (my parents). If my parents hold the majority percentage of the total, since they also paid accordingly, would gift tax still be incurred?

Now completely hypothetically and with fictional numbers. The plot costs 100,000. Your husband pays (hidden how exactly) the entire amount, but you are all listed as equal owners in the land register (each 25%). Then a house is built on it with construction costs of 400,000 EUR. The invoices are paid by all your parents. However, the house also belongs 25% to each of the plot owners. That means effectively your parents gift each of you 100,000 EUR. For you this doesn’t matter because of the tax exemption from parents to children (incidentally theoretically twice, since once from each parent, which I forgot to mention above). For your husband the exemption is two times 20,000 EUR, so 100,000 - 40,000 = 60,000 EUR taxable gift amount. Accordingly, you can of course now shift the shares on the plot so that more total value lies with the parents and the gift amount is reduced. But as mentioned, a tax advisor should look at it to see if that is really the most sensible option. Especially since the bank probably then spoils the plot financing if suddenly three other parties are to have co-ownership and even get a larger share. Then in the end they want you all to enter the loan. I consider the private loan option possibly with additionally registered residential rights for the parents to be the most sensible, but as said, a tax advisor or for the residential rights the notary should explain that to you in detail. Caution: residential rights also affect the plot value and thus the loan.