Which groups of people belong to this, we have put together in the guide Riester pension for you.
With the help of Wohn-Riester, consumers can receive up to € 300 a year in state subsidies for loan repayment of construction loans. With the promotion of a specific purpose is connected, because the subsidy amount may only be used for mortgage lending or age-appropriate remodeling of the property.
Wohn-Riester can be applied for together with a certified home savings contract. Existing Bauspar contracts can also convert savers into Riester contracts. In addition, other Riester saving forms can be used for the repayment of real estate loans.
Requirements for residential Riester promotion
The residential Riester subsidy can benefit compulsory insured persons of the statutory pension insurance as well as officials and recipients of emoluments. In addition, child-rearing children may also reside during the periods considered for the pension. The demand for compulsorily insured persons is also available for the farmers’ old-age insurance. Unlike other Riester products, residential Riester can also benefit those who receive a disability or disability pension.
Usually, self-employed people can not benefit from a Riester subsidy. An exception, however, applies to self-employed persons who contribute to the statutory pension insurance, such as artists who make contributions to the Künstlersozialkasse.
Housewives or housewives who are not on parental leave, as well as recipients of social assistance or unemployment benefits can not use residential Riester.
With Wohn-Riester, the purchase of real estate can be promoted, which are used by the eligible person itself.
- Mortgage lending (new construction, reconstruction): You can use the Riester subsidy for the repayment of a loan for a new building or the purchase of a property.
- Debt rescheduling : The subsidy can also be used for a rescheduling of loans that were taken for the purchase of the home.
- Age- appropriate conversion : If you spend more than half of the conversion costs for barrier-free construction in accordance with DIN specifications, you can also use your Riester home savings contract for age-appropriate conversions. For the age-appropriate conversions you must spend up to 20,000 euros, so that you may use Wohn-Riester.
However, the use of residential Riester is not limited to the purposes mentioned here. So you can use the promotion also for the acquisition of cooperative shares, if you live in a property of a housing cooperative.
Residential Riester also possible abroad
With Wohn-Riester you can also promote real estate that you do not buy in Germany but in another EU country. But here, too, the condition applies that you inhabit the property itself. Apartments or second homes are not eligible!
If you buy an apartment building, it is also possible to promote your share of the house with Wohn-Riester, while you rent other housing units. It is important that you really inhabit the subsidized part yourself.
It is also conceivable to promote a retirement home, in which you acquire a lifelong right to live, but do not own the property.
Convert Riester pension into residential Riester
Anyone who already “riesterert” in the pension sector can convert his Riester pension into residential Riester. It should be noted that the credit accumulated in the pension insurance may only be used for the purposes of residential Riester promotion. Another alternative is to use the credit accumulated at the beginning of the pension to pay off a building loan.
Check change to residential Riester
Recommended is a change to residential Riester, if you find that the return on the Riester pension is less than the interest payable on the residential Riester loan.
Promotion only possible with a Riester product
You can only use the promotion of a Riester product. A simultaneous use of Riester pension and residential Riester is not possible. Save at the same time in a Riester home savings and use a Riester pension, a contract is repealed.
Can the Wohn-Riester contract be retained when moving?
Anyone who has taken advantage of the Riester subsidy for his self-used property, but in the meantime has to move for professional reasons, does not lose the claims under the Residential Riester contract. The apartment or the house can be rented in the meantime. However, it is a prerequisite that the recipient of the support moves back into the subsidized home at the age of 67 at the latest and lives there permanently.
Only a job-related move counts
This regulation only applies to a job-related move. If you just rent your Riester-funded property in this way, you risk a “punitive taxation” on your housing subsidy account.
Residential Riester: minimum contribution and support
Who wants to receive housing Riester subsidies, must save at least four percent of his social security income from the previous year. The maximum limit for savings is 2,100 euros annually.
The beneficiary receives a grant of 154 euros per year. For children born before 2008, you will receive € 185 from the state, and € 300 per child for all children born after that. A family of four with two children can therefore receive up to € 770 in subsidies over residential Riester per year if the children were born after 2008.
Like other Riester products, Wohn-Riester can also be made free of contributions if, for example, the beneficiary becomes unemployed and can no longer afford the necessary savings. It is recommended, however, to waive the freedom of contribution and to pay at least the base amount of 60 €, so that the promotion is maintained.
The financial expert Prof. dr. Steffen Sebastian expresses himself here objectively and critically on the topic of Riester pension. Read if and if so, for whom “Residential Riester” in his opinion worthwhile.
Term and repayment
Consumers can already before maturity amounts from the residential Riester subsidy to finance home ownership. It is possible to use partial amounts or the complete accumulated sum from the contract. These amounts do not have to be repaid. However, you must take into account that you still have to tax the total amount of subsidy through your housing subsidy account in the pension phase retrospectively.
When and where can the payment be requested?
The payment of the Riester money can be requested from the Central Allowance Office for Old Age Wealth (ZfA) with a written and informal application. Prerequisite for the early termination is that you use the capital for a real estate purchase or to finance a self-used property.
Pros and cons of residential Riester
- Savers can deduct annual repayment installments for tax purposes
- Consumers can shorten loan time
- It is possible to reduce the interest burden
- Beneficiaries save themselves by the home the rent in retirement
- Support is retained on occupational relocation, if the property is used in retirement itself
- After a sale, the promotion can continue to be used if the consumer invests within five years in a new property that he will use himself
- Increase in taxable income in old age as the housing subsidy account is taxed
- In the event of death, divorce or transfer to a nursing home, the tax savings after the sale of the property must be paid immediately
- The tax debt will be transferred to the heirs at Wohn-Riester
- The savings contract is less flexible than other investment products
- There is a relatively low prepayment on most Riester Bauspar products
- The promotion is limited to self-used real estate
For whom and when is Wohn-Riester worthwhile?
In principle, state support may be worthwhile for anyone planning to buy a home. Those who also have children can significantly increase the state subsidy and benefit even more from the subsidies.
Anyone who uses Wohn-Riester has tax advantages during the savings phase, as with all Riester products. However, the income received by the saver in the payout phase must also be taxed. With the Riester pension, the monthly pension payment is taxed. Since this is not possible with Residential Riester, the tax office creates a so-called “housing subsidy account” in order to derive the subsequent tax payment based on the respective tax rate. The housing subsidy account is therefore a virtual account that is only used for tax law reasons.
This includes own funds, allowances and repayment installments. The credit will earn interest at two percent a year. Upon retirement, this amount will be used to collect the taxes that the consumer must pay until he reaches the age of 85. If desired, the tax due can also be paid in one amount to the tax office. The retiree then only has to transfer 70 percent of the taxes due.