Residential Riester subsidy

Is the Wohn-Riester subsidy a good financial support option for prospective builders? As is so often the case in life, this question also depends on the individual case and personal circumstances. In principle, the Wohnriester subsidy is aimed at everyone who pays into the statutory pension fund and is particularly suitable for those who want to live rent-free in the not too distant future. The subsidy can be of great help in financing your own home , but it also includes one or two clauses that you should pay particular attention to before claiming. What you need to know about the Wohn Riester grant is summarized below for you.

the essentials in brief

• The Wohn Riester subsidy is particularly suitable for people who expect a reduction in their income or an increase in their expenses in the foreseeable future and thus want to complete the financing of their house or apartment as quickly as possible.
• In principle, the subsidy can be understood as a shift in the tax burden, since the allowances and tax advantages received have to be taxed retrospectively in the pension.
• The use of Wohn Riester is subject to a number of rules, which you should find out about in advance.

Who benefits from the residential Riester?

Wohn Riester grants consist of government grants in the form of allowances and tax breaks. These can be used to repay financing loans more quickly and thus reduce the overall interest burden and the financing period. Annual repayments of up to €2,100 can be deducted from income tax as special expenses. Normally, a certain amount has to be paid into an insurance policy or other form of investment every year in order to receive the subsidy. With the Wohn Riester, the financing rate itself is already eligible, so that builders can receive the subsidy without additional monthly costs. The tax advantages linked to the subsidy also make the subsidy attractive for higher earners.

Often referred to as a homeowner’s pension, the subsidy is particularly worthwhile for people who are about to retire. However, the loan must be paid off in full by the time you retire. After all, the state promotes old-age provision, i.e. rent-free living after retirement. In addition to this target group, young families with small children in particular also benefit from the faster repayment of the loan and the resulting financial relief in the long term.

What do you have to pay attention to?

Anyone who takes advantage of the funding must adhere to strict rules. The subsidy provides for your own house as a retirement provision, which is why selling the property is considered to be detrimental to the subsidy. Anyone who does not buy a new owner-occupied property within 24 months before or five years after the sale of the house must repay the allowances accordingly. Another strict regulation applies to renting: Anyone using the Wohn Riester subsidy is not allowed to rent out the house. However, there are exceptional cases, for example if you have to move for a limited period of time for work-related reasons.

You should also keep in mind that there are lower limits for the repayment of the subsidy: The minimum amount for the repayment of the Riester loan is 4% of your annual gross income. With a salary of €35,000, for example, this corresponds to €1,400 per year or around €117 per month. The allowances and tax benefits have to be taxed in the pension, but since the tax rate in old age is usually lower than during working life, the Wohn Riester is still worthwhile.

So you have to realize that the subsidy is not just a gift from the state, but represents a shift in the tax burden. The advantage: Builders can now use allowances and tax benefits to pay off their own four walls more quickly and then subsequently pay lower tax on them in their pension. In most cases, this is even worthwhile if the interest rate is higher compared to another subsidized loan, because the faster repayment saves the financing period and thus also interest payments.

Autorin Sarah Völkl

Sarah Völkl hat Architektur studiert und ist seit Jahren das Gesicht von a better place. Mit ihren Videos ist sie bei YouTube vielen Personen schon länger bekannt. Sarah teilt Ihr Wissen jetzt auch bei den Bautipps von Almondia.