Taking possession before gift / usufruct / renting - disadvantages?

No? Then I don’t understand the sentence. "However, I also see the necessity exactly like that."

There are no siblings. Only one child.

In case it is important:
The mentioned apartment is still "encumbered" with a loan. The parents are debtors.

It would be necessary if you are really sure you can save taxes – but since you say nothing about your financial situation, it cannot be assessed from the outside.
Everything else you cite as reasons could probably be solved contractually, without a land register entry. I just don’t quite understand where your advantage lies.

Good morning :)

So, I don’t find usufruct unusual at all. I know it from many families where the inheritance exceeds 400 K€ per child in total ...

Legal difference usufruct vs. right of residence:
- With the right of residence, the right holders are allowed to live in the apartment. As soon as they move out for a period of X (usually 6 months), the right of residence expires. The recipient of the gift can do whatever they want with the apartment.
- With usufruct, the usufructuary remains the economic owner. That means they may also rent out the apartment and have the rental income, e.g., later for a nursing home. Only selling is not allowed for the usufructuary. That would be the owner’s right, but the usufruct right remains and would be sold along with it --> this is why says that such an apartment is not salable and only difficult to mortgage.
- Both rights are notarized and registered in the land register. The fees are the same in both cases; they are determined based on the value of the object being gifted.

Let’s take a fictitious example:
Market value of the apartment 500 K€, of which land value portion 100 K€, property interest rate 2%,
rental income of the apartment 15 K€ (assumption from the apartment value), non-allocable additional costs 2 K€ --> net income 13 K€ / year,
age of the donor 60 years (W) --> capital factor 13.871,

Income value per year = net income - land value * property interest rate = 13 K€ - (100 K€ * 2%) = 11 K€
Capital factor = 13.871 --> usufruct value = capital factor * income value = 11 K€ * 13.871 = 152 K€
Gift value = market value - usufruct value = 500 K€ - 152 K€ = 348 K€

You can already see, if the apartment value is significantly higher, the 400 K€ limit is not so far away at all. The variables are the net income (the higher, the better for the gift) and the property interest rate or the land value portion of the apartment (the lower, the better).

If the recipient now wanted to take out a loan on the apartment, which they can in principle, only the gift value minus the 2nd rank in the land register and the difficulties in auctioning due to usufruct count for the bank. That means they would probably only get a maximum mortgage of about 250 K€ with relatively poor interest rates.
But I assume the parents do not want the apartment to be mortgaged. A right of recourse would be possible in case of a mortgage. That means the parents can fully reclaim the apartment. Notary and land register costs would be incurred again, but only if the recourse actually occurs! (Within the family one generally does not necessarily assume this).

But since you don’t say anything about your financial situation, it cannot be judged from the outside

Apartment worth > 600 K€ and owner-occupied house. 1 child. Sure, we don’t know how high the remaining debts are, but I assume an inheritance volume well over 400K€ here.
Who owns the house and the apartment? The 400 K€ exemption applies to both (!) parents. It gets really tricky with a Berliner Testament ...

Hello.

Thank you for the explanations!

The mentioned apartment belongs to both parents, so basically jointly.

Best regards

...
Could you possibly give me a rough estimate (just for orientation) of what such a notary service costs?

Gift contract
vs.
Gift contract with usufruct right

Isn't that approximately the same??

Out of curiosity/interest, I would really like to know, what does a notary cost?

What fees does he charge for a normal gift and which for a gift with an agreed usufruct right?

Doesn't it balance out?

Best regards

On 8 pages, the wildest speculations were made here, although a lot has already gone wrong on your side. Which house in a rural area is worth 600,000€? Why was it not rented out even though there are still debts on it? The whole effort with the lease contract, usufruct, and gift is all unnecessary. The debts must be clarified beforehand, who takes them over and pays them. Financing for someone who has just returned from abroad for a property burdened with usufruct is difficult. The value is below the limit of 400,000€ each, therefore both without gift tax and later without inheritance tax. Anyone can move in anywhere without a lease, without rent, without it having any impact later. And whether the house is handed over now or in 3 months or 3 years, no matter how, it does not matter.