Many owners in Düsseldorf and North Rhine-Westphalia wish to pass their house or condominium to the next generation while they are still alive. Such a transfer during one's lifetime (Überschreibung) – legally usually a gift or a transfer-of-ownership agreement (Überlassungsvertrag) – can save tax, prevent disputes when inheritance is at stake, and bring assets into an orderly structure early on. For this to succeed, the right arrangement matters: allowances, usufruct (Nießbrauch), the compulsory portion (Pflichtteil) and rights of reclaim must fit together. This guide explains the key building blocks. It does not replace individual legal or tax advice but prepares you for a well-founded decision.
Transferring, Gifting, Handing Over: What Is Meant?
In everyday language people speak of "transferring a house" (Haus überschreiben). Legally, this usually involves a gift (Schenkung) under §§ 516 ff. BGB or a so-called transfer-of-ownership agreement (Überlassungsvertrag), in which the transfer is linked to consideration such as a right of residence, a duty of care or maintenance benefits.
The decisive point is: a property cannot simply be "handed over" informally. Only the notarial recording of the contract and the subsequent registration of the new owner in the land register (Grundbuch) make the transfer effective. Until registration in the land register, everything legally remains as before.
- Gift (Schenkung): transfer free of charge, often to children or grandchildren.
- Handover (Überlassung): transfer in return for reserved rights (e.g. usufruct, right of residence, care).
- Inheritance (Vererben): transfer only upon death – in contrast to a transfer during one's lifetime.
Gift Tax: Allowances and the 10-Year Rule
Gifts and inheritances are treated equally for tax purposes. The relevant figures are the personal allowances under § 16 ErbStG, which depend on the family relationship. Up to these amounts, the transfer remains tax-free:
- Spouses and registered civil partners: 500,000 €
- Children and stepchildren (as well as grandchildren whose parents have already died): 400,000 €
- Grandchildren (parents still living): 200,000 €
- Parents and grandparents (in the case of a gift): 20,000 €
- Siblings, nieces, nephews and all other persons: 20,000 €
The great advantage of a gift during one's lifetime lies in the 10-year rule (§ 14 ErbStG): the allowances are available again in full to each person-to-person relationship every ten years. Those who transfer early and in stages can thus pass on considerable assets tax-free. In addition, the allowance applies per parent: father and mother together can therefore give a child up to 800,000 € tax-free within ten years. If the value exceeds the allowance, a tax rate under tax class I (§ 15, § 19 ErbStG) of 7 % (up to 75,000 € above the allowance) up to 30 % applies.
Usufruct and Right of Residence: Security and Tax Advantage at Once
Those who transfer a house often wish to keep living in it themselves or to retain the rental income. There are two well-established reserved rights for this purpose:
- Usufruct (Nießbrauch): the donor may continue to use the property themselves and keep the income (e.g. rent).
- Right of residence (Wohnungsrecht): the donor retains the right to live in the property without a claim to the income.
Both rights are secured in the land register and at the same time reduce the taxable value of the gift. After all, the recipient only receives the property "encumbered". The capital value of the reserved right is determined under the Valuation Act – from the annual value of the use and a multiplier that depends on the age of the beneficiary (§ 14 BewG, limitation of the annual value under § 16 BewG). This capital value is deducted from the property value. In this way, a house that is objectively valued higher can mathematically fall below the allowance – and the gift tax is eliminated or significantly reduced.
The Compulsory Portion and the Pitfalls of Tapering
Anyone who disadvantages close relatives – for example other children or the spouse – through a gift should be aware of the claim to supplement the compulsory portion (Pflichtteilsergänzungsanspruch) under § 2325 BGB. Those entitled to a compulsory portion can demand that gifts made in the last ten years be added to the estate by value.
Here the so-called tapering (Abschmelzung) applies: for each full year since the gift, the chargeable value decreases by one tenth. After one year, 9/10 are therefore taken into account, after five years 5/10, and after ten years the inclusion ceases entirely. Those who transfer early can thus effectively reduce the compulsory portion.
One important exception: if the donor reserves a usufruct (Nießbrauch), the ten-year period, according to case law, generally does not begin to run as long as the donor remains the economic "master of the matter". With gifts between spouses, too, the period usually only starts upon dissolution of the marriage. These constellations are complex and belong in expert hands.
Rights of Reclaim: Security for the Donor
A transfer is in principle final. So that you as the donor nevertheless remain protected, rights of reclaim can be agreed. The law already provides for two cases:
- Impoverishment of the donor (§ 528 BGB): if you can no longer cover your reasonable maintenance, for example because of high care costs, the gift can be reclaimed. This right can also pass to the social welfare authority.
- Gross ingratitude (§ 530 BGB): in the case of serious misconduct by the recipient towards the donor, revocation of the gift is possible.
In addition, contractual reclaim clauses are common, which are secured in the land register by a priority notice of re-conveyance (Rückauflassungsvormerkung). They make sense, for example, in the event of the recipient's insolvency or compulsory enforcement, the predecease of the recipient, or a divorce, so that the property does not end up in a third party's equalisation of accrued gains.
Costs and the Tax-Free Family Home
The notarial recording is required by law (§ 311b BGB) – without it the transfer agreement is void. Notary and land register costs are based on the transaction value (usually the market value of the property, where applicable reduced by encumbrances such as the usufruct) and are set out by law in the GNotKG. In practice, notary and land register together often amount to roughly 1.0 to 1.5 % of the property value.
A significant advantage of a gift: no real estate transfer tax (Grunderwerbsteuer) is due when transferring to relatives in the direct line (e.g. children). A further exemption concerns the family home: if one spouse transfers the owner-occupied property to the other during their lifetime, this remains tax-free under § 13 para. 1 no. 4a ErbStG – with no value limit and without being counted against the allowance.
The Process Step by Step – and the Value of a Sound Valuation
A well-thought-out transfer typically follows these steps:
- Clarify objectives: who is to receive what, and what protection do you need for yourself (residence, provision)?
- Value the property: a realistic market value is the basis for allowances, tax and the compulsory portion.
- Seek tax advice: your own tax advisor reviews allowances, the usufruct value and the arrangement.
- Have the contract recorded by the notary: including reserved rights and rights of reclaim.
- Re-register the land register: the new owner is entered, rights are secured.
The cornerstone is laid by a professional property valuation. If the value is set too low, additional claims from the tax office threaten; if it is set too high, allowances are wasted. As Richter Immobilien-Transaktionen from Düsseldorf, we have been supporting owner families for decades with a careful, market-appropriate valuation – and, should the family later decide to sell, we are at your side with a network of more than 20,000 contacts grown over decades and the utmost discretion.
