A Riester contract can also be used to finance a property.
(Photo: dpa)
Berlin The dream of owning a house or a condominium is far from over for many, despite increasing challenges. Rising interest rates and problems finding craftsmen and procuring materials cannot deter them from their goal. After all, owning your own home means rent-free living in old age. In addition, personal design wishes can best be implemented within your own four walls.
Many builders or real estate buyers have the opportunity to use capital from a Riester contract to repay a loan. However, there are a few pitfalls to be aware of with this so-called residential Riester. A homebuyer, whose case was recently decided by the Federal Fiscal Court, also had to experience this.
The buyer applied to the responsible ZfA, the allowances office for old-age assets of the German pension insurance, for a payment of a total of 10,350 euros from her Riester old-age provision contract. She wanted to use this amount for three unscheduled repayments of the loan she took out when she bought the apartment.
Before the payment was made, the authority pointed out to the woman in the so-called permit notice that there must be a direct temporal connection between the withdrawal of the money from the Riester contract and the use for residential purposes. This would be complied with if there were a maximum of twelve months between the payment of the capital from the pension contract and the repayment. On the other hand, exceeding this time frame would be considered harmful use and would have tax consequences.
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Use of Wohn-Riester to repay loans
After the apartment buyer had received the desired amount from her Riester provider at the beginning of July 2015, she made an initial repayment of EUR 3,450 shortly thereafter. The second followed almost seven months later, before the last special repayment was made in mid-2017. In the same year, the ZfA then determined that the lump-sum payment from the Wohn-Riester was being used in a partially harmful manner and therefore set a repayment amount of EUR 1,641.05.
>> Read here: Every second German lacks the money for a home of their own
On the other hand, the buyer sued successfully before the Berlin-Brandenburg Finance Court. The judges interpreted the legal text in such a way that the direct use of the capital was only necessary if it was used for the purchase or construction of a property. In the event of a repayment, this would be seen differently in their opinion.
In the subsequent revision, however, the Federal Fiscal Court came to a different conclusion (AZ. XR 26/20). According to his assessment, the provision for the immediate use of the capital means that amounts withdrawn from a pension contract cannot be misused. However, this is only the case if they are used for the intended purpose after a short period of time. Accordingly, when repaying the loan, only a short period of time may elapse.
In principle, immediate capital investment required
In the present case, however, only the first two special repayments are within the planned time frame. The last payment, on the other hand, exceeds the maximum possible period of twelve months. From this it follows that the issued recovery notice is lawful.
>> Read here: How real estate prices for houses and apartments are developing
The fact that the apartment buyer had already mentioned the years 2015, 2016 and 2017 as the repayment dates in her application is also irrelevant. Because the ZfA had already pointed out the payment period to be observed in its approval notice, the buyer could not assume different deadlines in her case either. The judges were therefore unable to recognize any trust that was particularly worthy of protection.
Practical tip: when Wohn-Riester is an option
Capital from a Riester contract can be used in connection with a property for acquisition, construction and loan repayment. The prerequisite is that the Riester saver is the sole or co-owner of the house or apartment. In addition, it must be his main residence or the center of his family life. In order to rule out subsequent taxation, the owner must live there for up to 20 years after the capital payment.
Exceptions apply only in the event of death and divorce or if another eligible property is purchased within five years. Shares in a housing cooperative, a permanent right to live in a retirement home or the barrier-free conversion of a property are also funded with Wohn-Riester.
Are you interested in this tax tip? You can find more articles at our cooperation partner Haufe.de.
More: For whom a home loan and savings contract can now be attractive.