Funding

Government grants are forms of financial assistance provided by the government-in the form of grants, low-interest loans, or tax breaks-that builders, buyers, and owners can access for certain real estate projects. They serve policy objectives such as creating affordable housing, improving energy efficiency in buildings, or ensuring accessibility. Unlike subsidized loans, grants do not have to be repaid.

Types of Subsidies in the Real Estate Sector

Subsidies can be divided into three main categories:

1. Grants: Direct, non-repayable cash payments, e.g., the BAFA grant for heat pumps or the KfW repayment grant under the Federal Funding for Efficient Buildings (BEG) program.
2. Low-interest loans: Loans below market interest rates from KfW or LfA Förderbank Bayern.
3. Tax incentives: Increased depreciation (e.g., Section 7h of the Income Tax Act [EStG] for redevelopment areas), tax exemptions, or special depreciation allowances for new residential units (Section 7b of the Income Tax Act [EStG], if applicable).

Federal and Bavarian Funding Programs

The most important sources for funding in Bavaria:

• KfW (Kreditanstalt für Wiederaufbau): Federal level, programs for new construction, renovation, purchase, and accessibility
• BAFA (Federal Office for Economic Affairs and Export Control): Grants for heating optimization and renewable energy
• LfA Förderbank Bayern: Bavarian programs for housing subsidies, modernization, and accessibility
• Bavarian Housing Subsidy Program: Applications can be submitted through the government of Middle Franconia for Nuremberg and the surrounding area

Current Subsidy Landscape 2025/2026

The subsidy landscape in the real estate sector changes regularly. Currently particularly relevant:

BEG Residential Buildings (KfW): Supports energy-efficient retrofitting to an Efficiency House standard with low-interest loans and repayment grants. The higher the standard achieved, the higher the grant. An iSFP (individual retrofitting roadmap) provides a 5% additional bonus on all individual measures.

BEG Individual Measures (BAFA): Supports individual energy-efficiency measures such as heating system replacement (heat pump, biomass, solar thermal), insulation, and window replacement with grants covering 15% to 70% of eligible costs.

Tax Incentives under Section 35c of the Income Tax Act (EStG): For owner-occupied residential property, renovation costs can be deducted from income tax at a rate of 20% (up to a maximum of 40,000 euros) over three years-as an alternative to BAFA funding.

Housing Assistance in Bavaria: Particularly relevant for families with children and moderate incomes - low-interest loans for the purchase or construction of owner-occupied housing through BayernLabo.

Important Basic Rule: Apply Before Work Begins

A common mistake: Owners hire contractors before the subsidy application is submitted. Nearly all funding agencies prohibit starting work prematurely. Anyone who starts before approval is granted loses their eligibility for funding entirely. Therefore, the rule is: Get advice first, then submit the application, then hire contractors.

Practical Tip for Homeowners in Nuremberg and Franconia

In Nuremberg, the Bavarian Consumer Advice Center (Lorenzer Platz) offers free or low-cost energy consulting, which is often a prerequisite for BEG funding. In addition, the City of Nuremberg provides supplementary municipal funding through the Office for Housing and Urban Development for certain modernization measures in designated redevelopment areas. We always inform our clients during the sales process about potential funding opportunities that can significantly reduce the purchase price or renovation costs. A comprehensive review of funding options is particularly worthwhile when purchasing existing properties with poor energy efficiency ratings (F, G, H): In some cases, renovation costs ranging from 50,000 to 80,000 euros can be reduced by 20,000 to 40,000 euros through grants and tax incentives.

Frequently Asked Questions

Can I apply for subsidies for a used property?

Yes. Renovation subsidies through KfW-BEG, BAFA, and LfA explicitly apply to existing properties as well. Anyone who buys a house and renovates it to improve energy efficiency can combine subsidies-provided the application is submitted before renovation work begins.

How many subsidy programs can I use at the same time?

In principle, multiple programs can be combined as long as the total subsidy amount does not exceed the actual eligible costs (cumulation rule). The exact rules for combining programs vary depending on the program-independent advice from an energy efficiency expert or financial advisor is recommended.

Where do I apply for Bavarian housing subsidies?

Bavarian housing subsidies are applied for through the relevant regional government. For Nuremberg and most of Franconia, the government of Middle Franconia in Ansbach is responsible. For builders and buyers, the Housing Subsidy Division there is the first point of contact.

What happens if a subsidy program expires during my construction phase?

Generally, the program in effect at the time of application applies. Subsidies that have already been approved remain valid, even if the program is later modified or discontinued. Important: Submit an application while the program is still active-and monitor changes to the subsidy conditions. We keep our clients informed about current changes at KfW and BAFA.

Subsidies for Families and Lower-Income Households

In addition to general energy and construction subsidy programs, Bavaria offers special subsidies specifically designed to support families with children and households with moderate or lower incomes. The Bavarian Housing Subsidy Program (BayWoFöG) provides low-interest loans through BayernLabo for the purchase or construction of owner-occupied residential property. Eligibility requirements include income limits that depend on household size, as well as the obligation to use the property as a primary residence for a specified period.

In addition, the Federal Ministry of Justice offers support through the “Jung kauft Alt” program for families who purchase listed or older existing properties and renovate them to improve energy efficiency. In Nuremberg, where many Wilhelminian-style and post-war buildings are on the market, this program is particularly relevant-it combines financial support with a requirement for energy-efficient renovation.

Making the Most of Subsidies: Checklist for Buyers and Renovators

To ensure you don’t miss out on any subsidies, we recommend the following steps:

1. Seek advice: Contact an energy consultant (energy efficiency expert, EEE) or consumer advice center before hiring contractors.
2. Compare subsidy programs: Review KfW, BAFA, LfA, and municipal programs-combinations are often possible.
3. Submit the application before starting work: No program subsidizes work that has already begun.
4. Prepare proof of funds used: Collect invoices and supporting documents for the final report - without complete documentation, you will not receive a repayment subsidy.
5. Examine tax alternatives: Section 35c of the German Income Tax Act (tax credit for owner-occupied real estate) may be a better option than a subsidy in some cases - especially if your income tax rate is high.

We guide our clients through this process and ensure that no eligibility for funding is forfeited.

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