Home purchase with usufructuary right and annuity
April 24, 2013 | 35,00 EUR | answered by Bernhard Müller
My brother wants to transfer our parental home to me. In exchange for a lifetime annuity or in installments. In any case, a right of residence should be entered for him. This right of residence should be linked to my brother's obligation to cancel it without compensation if he is expected to be permanently unable to do so (12 months) due to a stay in a nursing home.
The house is worth approximately €170,000. The right of residence applies to a 115 sqm apartment. Present value of the right of residence at €3.65/sqm (yes, we live in a rural area) is approximately €153,000 (My brother is only 48 years old).
The plan is to make installments with 1% interest. Purchase price is €95,000 + right of residence €153,000. Installment payment of €500/month for 204 months (17 years).
1. Is this transaction unquestionably considered a purchase? Am I therefore potentially excluding social recourse?
2. Real estate transfer tax would be payable on the purchase price + right of residence €95,000 + €153,000?
Dear inquirer,
the planned business is to be considered a purchase. This is already evident from the fact that you are providing a service of 95,000 purchase price + 153,000 right of residence, totaling 248,000, while the house is only worth 170,000.
Therefore, in the event that your brother has to go to a nursing home, social recourse claims against you should be excluded. A prerequisite for this is that your brother can still exercise the right of residence at the time of contract conclusion, and the deterioration of his health condition, which prevents him from doing so, occurs only after the registration in the land register.
Such claims against your brother cannot be completely ruled out in the event that you yourself, for example, have to go to a nursing home after an accident, if you and your brother demonstrably assume at the time of contract conclusion that the house is only worth 170,000. In that case, your brother has received 78,000 more than the house is worth. Therefore, the purchase can then be considered as a mixed gift, where you are not only buying the house, but also giving your brother an additional 78,000. So it should not be mentioned that you assume a value of only 170,000. You and your brother assume that the house is also worth the 248,000 that you are providing.
Regarding the real estate transfer tax, I assume that your brother is now the sole owner of the house.
The real estate transfer tax is based on the value of the consideration (§8 I GrEStG). The consideration in a purchase includes the purchase price including any other services assumed by the buyer and the reserved uses for the seller (§ 9 I No. 1 GrEStG). Therefore, your assumption is correct that the real estate transfer tax is to be paid on the purchase price of 95,000 + right of residence of 153,000.
Please note that my answer is based solely on the information provided by you. By adding or omitting details, the legal assessment may also change.
I hope that my answer has been helpful to you.
Sincerely,
Bernhard Müller Attorney
