Transfer house ownership -> general questions

First, it should be clarified who pays maintenance, etc. Ideally, the parents will live for a very long time and (less ideally) during that time the heating or the roof will need to be replaced. At least briefly, one could also consider where one might no longer be entitled to support programs (e.g. Baukindergeld) because one already owns a property, or whether your friend (hopefully not to be assumed) might at some point be forced to sell the house. If the latter case is secured with a right of residence, I would, as a precaution, also clarify in advance which rights and obligations should otherwise be set during the transfer.

The inheritance/gift tax is, as far as I know, applicable for parents to children from €400,000 (the €500k applies between spouses). So if this cannot be somehow divided, it would also be due on the currently intended gift.

The advantage of gifting instead of inheriting is primarily the "securing" of the assets. With the end of each year, 10% of the gift amount is protected from third-party access (usually the state in case of need for care), until after 10 years nothing can be clawed back.

How much is the house worth now?

That is not correct; the tax exemption amount is only €500,000 for life partners and spouses, €400,000 for entitled children, and only €20,000 for everyone else.

The original poster (OP), the initiator, lives in Bavaria, where a normal single-family house with sufficient land often exceeds €400,000, so I find it very reasonable for the parents to start thinking about this now. Regardless of whether you plan to live in the house yourself or not. This way, you can save a lot of money because in the event of the parents' death, each child will inherit their share and, if the amount exceeds the exemption, will have to pay taxes. The tax office and inheritance law do not care at all whether you want to live there or not.

What I do not understand: did the brother receive the building plot from the parents as a gift, or why is he not included in the considerations? Is it documented anywhere that, if this is the case, the building plot is part of his inheritance? Otherwise, even if the parents would rather transfer the house to someone who will live in it, he still has a claim to the compulsory portion.

I now assume that you and the brother are on good terms and everything has been agreed upon to mutual satisfaction; in that case, I would DEFINITELY transfer ownership now. In the event of death, the statutory regulations apply if nothing else has been established in writing and notarized (will). Notarized in this case because simply written wills kept in some private drawer for emergencies are often challenged or suddenly disappear. I would not rely on that.

Now the parents can influence to whom and how much they transfer and possibly split the gift into two parts (I generously allow people who are only in their mid-50s another 10 years) to avoid inheritance tax and possibly an inheritance dispute.

And in all of this, it is completely irrelevant whether you want to move in at some point or not.

What I honestly do not understand is what business you have in this. I, as the testator, would definitely only leave it to my children, not to the (expected) sons-in-law or daughters-in-law. Over 50% of marriages end in divorce, and then the ex-wife and ex-daughter-in-law suddenly own part of the house. That would be an absolute no-go for me. Besides, your exemption in that case would only be €20,000 – well, maybe the garage...

My contribution referred to Tassimat - Dr. Hix has already corrected the numbers.

And exactly because of such concerns from Nordlys regarding an inheritance to the "daughter-in-law," I would at least clarify this topic with the boyfriend. Nordlys, you and your wife have already bought something together, right? Because theoretically, she could leave you tomorrow and then half would belong to her. Unimaginable, such a thing. ;-)