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A right of abode in the own house is for many owner:inside a dream. In this article you will find out which things you should pay attention to when selling a house with a right of abode, which obligations and rights exist and which documents are important for the sale.
The most important in a nutshell
- The right of abode exists as a personal right and as a right in rem. Both must be entered in the land register.
Directly to the desired topic
What does the sale of real estate with right of abode mean??
When talking about the sale of real estate with residential rights, two scenarios come into question:
- You would like to sell your property as owner:in and in doing so you would like to have a Right of abode for oneself grant. So you sell, but are allowed to stay in the house or apartment.
- As the owner:in, you would like to sell a property for which a Current right of residence is registered.
For both cases § 1093 BGB contains the applicable regulations. If the buyer and seller agree on a right of abode, this means that the owners of the right of abode may continue to use the apartment or house without having to enter into a tenancy or be the owner. The right of residence is entered in the land register after notarization.
Lifetime right of abode or limited right of abode?
A right of abode can for a limited period of time or for life can be agreed upon. Mainly a lifelong right of residence is agreed upon, if parents transfer the house to the children during their lifetime, but they want to continue to live in it.
The lifelong variant is also interesting for life partnerships. A right of residence can be granted to unmarried partners so that disputes about the inheritance can be avoided in the event of premature death.
In the case of a limited right of abode, the beneficiaries are entitled to a prior fixed period live in apartment or house. This right of residence expires after the specified period.
Personal easement or right in rem?
In addition, a distinction is made between two forms of the right of residence distinguished. There is the right of residence as:
- limited personal easement: right of residence only for the registered person
- right in rem: Right of residence that also applies to relatives or caregivers of the registered person.
If, for example, nursing care is needed in old age and the right of residence was granted as an easement in rem, nursing staff could also live in the property.
There is a difference between the right to live and the usufructuary right, even though the two are often used synonymously. In the case of the right of residence only the explicitly named beneficiaries are allowed to personally use the property. In the case of usufruct, the beneficiaries may also use the apartment or house, for example rent out to third parties.
Sell and still stay in your home?
House sale with right of abode: The advantages
Selling the house and agreeing on a right of residence for life has some advantages over the classic sale of real estate:
- You can continue to use the house or apartment as usual, but are largely exempt from the obligations of ownership. Especially for older people who want to sell the property to relatives, for example, this is an interesting option.
- You have the choice: Decide for a simple gratuitous right of abode, where you do not pay any rent and only pay for the usual incidental expenses? Or put on the Concept of life annuity, in which the new owner:s grant you a right of residence and pay a lifelong monthly pension instead of the purchase price of the property? Or let the pay out the full purchase price and in return pay a monthly rent?
- You do not have to worry about finding a new place to live despite the sale of the property, and No costly relocation arrange.
A right of abode in combination with an annuity is especially recommendable if the actual annuity is relatively low and no larger expenditures are pending for which the complete sales sum is needed. So you are be financially secure in the long term.
Tax aspects of the sale with a right of residence
If the real estate sale is to take place with granting of the right of abode, certain aspects are important with regard to the tax: the gift tax on the one hand, the speculation tax on the other hand.
The gift tax
If you want to sell your house and keep the right of abode for yourself as the former owner, you benefit from a financial advantage. The Sale of an apartment or house in spite of the right of residence is to be understood as a gift and must therefore be taxed. However, there are tax allowances that depend on the relationship between the buyer and the seller or the donor and the beneficiary.
The following allowances are provided for (§ 16 ErbStG):
Grandchildren (whose parents are already deceased)
The speculation tax
As with other real estate and apartment sales, you must be when selling the house despite the right of abode, observe the speculation period, in order not to have to pay speculation tax. If you sell a property within ten years of purchasing it and keep the right of residence, you must pay tax on the profit.
The The amount of speculation tax depends on the profit made and your personal tax rate. However, since you can usually expect a relatively low profit if you want to sell a house or apartment with a right to live there for life, the amount should be kept within reasonable limits.
House or apartment sold despite right of residence
What is important if you own a house or an apartment with an existing right of residence and would like to sell this property?? Here, above all, the following should be noted:
- In the case of sale, the right of residence still exists.
- Buyers:inside can therefore cannot freely dispose of the property.
For these reasons it is not easy to sell an apartment or a house with a right of residence. The target group outside of family and friend:in is very limited. An own property with registered right of residence could be interesting for capital investors. But also people who want to use the house or apartment themselves only after years and want to protect themselves from further rising prices, could be interested to save money in the long run.
In order to sell an apartment with a right to live there for life, real estate agents are good contacts. With them it may be possible to find interested buyers faster, because they have necessary connections. Consider that the purchase price is below the usual market value if such a burden is present.
A Cancel the lifelong right of residence in order to increase the chances of the sale and the price, you cannot. Residential beneficiaries must give their consent in this regard before the entry in the land register can be deleted. It is possible that the rights owners can be persuaded to change their minds with a settlement.
Whether it is worthwhile for you as a seller:in depends on the amount of the settlement and the losses likely to be incurred in the sale. If the beneficiary does not agree, the right of residence expires in the following situations:
- Expiration of a time-limited right of residence
- Death of the owner of the right of residence
- Property is not habitable
- Right of abode was linked to certain conditions, which have ceased to exist
- Forced sale of the property
If the owner of the right dies, the right of residence expires. The right of residence cannot be inherited. Transfer to third parties is also not possible.
Particularly in the case of properties in sought-after locations, it can be quite profitable to pay a settlement to the rightful occupants.
Calculate the right of residence: How does it work?
The value and thus also the purchase price of an encumbered property with right of abode is significantly lower compared to an unencumbered property. Tables from the German Federal Statistical Office help to calculate the reduction in value due to lifelong residential rights. You form Capital values depending on the gender and age of the owner of the right of residence and take into account the average life expectancy. Depending on the property, a fictitious rent, calculated on an annual basis, is multiplied by the capital value.
|Completed age||Remaining life expectancy in years (m/f)||Capital value in percent (m/f)|
|55||25,61 / 29,64||13,940 / 14,860|
|65||17,71 / 20,9||11,444 / 12,580|
|75||10,79 / 12,87||8,198 / 9,303|
|85||5,44 / 6,38||4,721 / 5,406|
Example calculation for the reduction in value due to the right to live there for life
|Total value of two-family house||220.000 Euro|
|Lifetime right of residence for a residential unit||For 75-year-old woman|
|Fictitious annual rent||9.800 euros|
|Value of the right of residence||91.140,00 Euro|
|Value of the property (total value – value of the right of residence)||128.860 euros|
You should carefully consider in advance whether the sale of real estate with a right of residence is worthwhile. The loss of value can be relatively high.
What documents do you need for the sale of real estate with right of abode?
Would you like to sell your Sell house or your apartment and keep the right of residence, you need some documents for the sale. These include:
10 euros (uncertified)
20 Euro (certified)
The following other receipts and documents you need if you are selling an apartment that comes with a life-long right of residence:
- declaration of partition from the land registry (10 Euro uncertified, 20 Euro certified)
- Minutes of the owners’ meetings of the last three years
- Current business plan and overview of reserves
Selling a house with a right of residence: no simple undertaking
If you decide to sell the house despite the right of residence, you should pay attention to the legal circumstances. These subtleties are not to be underestimated. Agreements within the family should also be recorded in writing, e.g. regulations concerning ancillary costs.
Preferably you should call in professionals like real estate agent:inside. You know the pitfalls and are helpful and consultative to the side, so that the house sale with right of abode for you ends advantageously.
If you would like to sell the apartment with lifelong right of residence, always keep all important factors such as ancillary costs in writing. Only when everything is really written down to the smallest detail should you start selling real estate for housing rights.