Real estate financing with Wohn-Riester

Recently, government subsidies and tax advantages that facilitate the construction or purchase of a property have become particularly welcome. Given rising interest rates, many prospective buyers are seeking new ways to finance their dream home. We present the so-called "housing Riester" scheme.

The Riester pension scheme for homeownership, also known as a home equity release scheme, helps finance owner-occupied property or, if it has already been purchased, pay off the debt. A Riester loan can be repaid with regular contributions, or existing savings from the Riester contract can be withdrawn.

Who can take advantage of the Wohn-Riester scheme?

Income has no bearing on eligibility for funding; it is granted regardless. The following groups of people are eligible for funding:

• officer
• Legally insured pensioners
• Part-time employees who pay social security contributions
• Recipients of unemployment benefits, sickness benefits or a pension due to reduced earning capacity or incapacity for work
• Self-employed individuals insured through the artists' social security fund
• People who are in a civil partnership or married to someone who has their own Riester pension contract
• People participating in the Federal Volunteer Service
• Sea pilots, midwives, many craftsmen
• Parents in the first 36 months after birth

What are the conditions of a residential Riester pension plan?

Four percent of the previous year's income subject to pension insurance contributions must be paid in to receive the maximum subsidy, minus any allowances (minimum €50, maximum €2,100). You can either take out a building savings contract with the "Wohn-Riester" subsidy or a mortgage. A basic allowance of €175 is granted annually. An additional €185 is granted for each child born before 2008, with a maximum of €300 for younger children. Savers under the age of 25 receive a one-time bonus of €200. Contributions can be claimed as special expenses on your tax return, and a tax advantage is often available. A tax advisor can be consulted for further information.

Is a Riester pension plan for homeownership worthwhile?

With a Riester-subsidized home savings plan, loans can be paid off faster. It's also helpful for retirement planning, as it allows you to live rent-free in your old age. Energy-efficient renovations or barrier-free modifications can also be financed with a Riester plan. However, keep one thing in mind: you must live in the property yourself. If you decide to rent it out or sell it, you may have to repay the subsidies. Therefore, before you start a Riester plan, seek professional advice from an independent financial expert.

Do you have questions about real estate financing or need support in planning your property purchase? Feel free to contact us! We offer personal and free consultations.

Notes

For the sake of readability, this text uses the generic masculine form. Female and other gender identities are explicitly included where relevant to the statement.

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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