Real Estate Financing: Hands off the living Riester!

A residential Riester contract guarantees every home buyer allowances from the state. That sounds great, but not worth it.

If it’s true what building societies say would be a blessing to all residential Riester. This would allow home buyers “build equity more quickly” and pay off loans faster. Finally, the state shoot 900 euros in allowances to year after year for a family of four. Paired with a building loan with which young people could secure the historically low-interest rates for decades, that sounds like a lush gift. Therefore it is not surprising that the number of residential Riester contracts is growing every year, only 2,015 of around 150,000 units. 1.5 million Germans have one.

A freelance writer in the economy of the Frankfurter Allgemeine Sonntagszeitung.

It is also the only Riester savings shape At length appreciably. The shoe uppers with mutual funds hardly grow, bank savings plans bob up there and the number of Riester pension schemes is steadily decreasing. The Riester has an image problem unless it comes to real estate. But is residential Riester really super idea to get quickly into the debt-free home, as is often claimed a lump sum?

Financial Calculator: Housing Riester Comparison

That is not right. Really is the matter of the allowances: 154 Euro basic allowance paid by the state per year, for the spouse as well, and for each child, under seven years there are 300 euros on top. And there are tax breaks that are set off against the allowances: Little earners with children benefit most from the allowances, with high earners the tax benefit is higher – at least in the savings phase. For now, the hook comes. What residential Riester commercials not break down – and building society advisers do better than ever, so were tests – is the phenomenon of “deferred taxation”: All funding received must be taxed at the age. And here comes in 30 years together quite something.

Suppose a 37-year-old saver will pay off till 67 with living Riester a condominium. He must also, incidentally, because the loan must be repaid upon retirement. So the homebuyer pays at least the required four percent of its gross income to pay off the loan and can also deduct a maximum of 2,100 euros in amortization costs from the tax. The 2100 Euro is the maximum rate of funding and tax breaks that are possible every year. It is precisely this support given sums the state year after year on a fictitious home subsidy account – and they still bear an interest rate of two percent per year. He remembers what he has lent to the savers and later gets a portion of it back.

But taxation is not the only hook

After 30 years, the home subsidy account is 86,000 euros heavy. The homeowners must pay tax. For a normal retiree with 27 percent tax rate, this means around 23,000 euros. Either he pays the one time – if he can – he gets 30 percent discount from the state. But as soon as one has in Immobilienabzahler expiration of his loan even a five-digit sum in store. Or he stutters them up to 85 years of age from, with just under 100 euros a month, 1,300 euros a year. That will hurt. Nevertheless, financial experts recommend the installment because the one-time payment catapults the tax rate in the year concerned at the current pace, that a 30-percent discount is an equal perdu. Only those who get more than 3000 euros pension imagine better with the lump sum.

But taxation is not the only catch. The terms of the building societies are another. Who is young, has to accumulate enough capital first. Since the interest rates of the building societies are not just a turbo for the account: You are in the residential Riester a meager 0.1 to 0.5 percent credit interest. And they are for years. Less the fees are after ten years Save usually less money in the account, as savers have deposited during this period – including all allowances that they have meanwhile received from the state.

And the incredibly cheap loans that young people should be secured for the future? The Riester lending rates are at 2.35 to 2.65 percent. Mortgage brokers and banks currently only require 1.3 to 1.7 percent interest on loans. If so you should really 30 years building society shoe uppers?

Especially since there are still as another condition: Riester savers must use their property themselves, from the purchase, until retirement, and even another 20 years beyond. Otherwise, they have to repay the entire promotion, so is the law. Especially young people should, therefore, consider carefully whether they can really tie up to 50 years at a residence.