The state housing subsidy has existed since 1952. It is intended to help citizens to buy more homes. In the past, however, more and more people dropped out of funding because their income was above the specified limits. These were raised this year, for the first time since 1996. More people are now benefiting from the premium. At the same time, the amount of funding increases. The question arises: For whom is the grant worthwhile – and when?
The housing subsidy is an annual grant. Both single (minimum age 16 years) and married people get it, if they either buy into building and housing cooperatives or have a building society loan agreement and adhere to the income limits.
So far, these have been 25,600 euros for singles and 51,200 euros for couples. The amounts have been higher since this year. “They amount to 35,000 euros and 70,000 euros, respectively,” explains the managing director of the Federal Association of Wage Tax Aid Associations (BVL), Erich Nöll.
It is the taxable income that counts. Therefore, even employee families with a gross wage of around 100,000 euros could now receive subsidies if their income falls to the limit with the help of tax deductions such as advertising expenses, special expenses and pension expenses.
Millions of award recipients in Germany
Around four million people currently receive the home construction premium. Most of them have a home loan and savings contract. In the future, there should be significantly more beneficiaries due to the increased rates. “We expect one to one and a half million to start new savings,” explains Christian König, General Manager of the Association of Private Building Societies.
The state will then give you and the others ten percent (instead of the previous 8.8 percent) of their own savings: Singles can expect a maximum of EUR 70 per calendar year, for married couples double the amount. Higher deposits are not eligible for funding.
Taking money with them from the state can be worthwhile for savers who have real estate plans. Because the credit must be demonstrably earmarked. That doesn’t necessarily mean buying or building. The so-called residential use is interpreted broadly in practice. It includes almost everything from A for demolition work or the replacement of real estate loans to B for bathroom renovation to Z for second garage.
Only then will the accumulated grant be allocated. Young people who are under 25 when the contract is signed are exempt from earmarking. After seven years you can freely dispose of your credit, so simply invest it in a car or a trip.
In Jörg Sahr’s opinion, all that is needed to take the premium with you is a small building loan contract, onto which the maximum subsidized rate is paid. “Depending on the building society tariff, a building society saving sum of 10,000 to 15,000 euros for single people and 20,000 to 30,000 euros for couples is usually sufficient to exhaust the premium,” says the editor of the magazine Finanztest.
However, Sahr does not only look at the premium and the not necessarily lavish return on a home loan and savings contract. Rather, he has an overall package in mind. For property owners, this includes having a building society loan available to them in addition to the credit after the contract has been allocated. This can be used for modernizations, for example. For example to renovate the bathroom or the entrance area.
Banks often charge interest surcharges for modernization loans under EUR 50,000 or refer to expensive installment loans, argues Sahr. In addition, the interest rate for the building society loan is fixed from the start. For modernizations, a subsidized building society loan agreement is therefore often cheaper than financing through a financial institution.
Prospective builders need less credit from the bank for their financing if they cover part of their costs with the building society loan agreement. Because this reduces the risk for the bank, the loan is often cheaper. Christian König has another argument: “Anyone who saves with subsidized housing construction premiums will save more with the same income and get their property earlier.”
The home construction premium must be applied for. Savers receive the form every year from the building society and send it back filled out. If necessary, tax advisors and income tax relief associations provide support. “The building society forwards the application to the tax office, which transfers the premium to the building society, which in turn credits it to the contract,” explains Nöll.
Further articles
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The grant can be applied for up to two years retrospectively; that for 2021 must be available to the building society by the end of 2023 at the latest. The minimum term of the home loan and savings contract is seven years. Anyone who exceeds the income threshold for the employee savings allowance but receives capital-building benefits can also apply for the housing construction premium. Riester home loan and savings contracts are excluded from the state savings subsidy. (dpa)
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