Housing Construction Incentive

Housing Construction Bonus - The Housing Construction Bonus is a government subsidy through which the federal government provides financial support for contributions to a home savings account. It is intended for employees, civil servants, and self-employed individuals with low to moderate incomes and is designed to help build equity for housing purposes.

Eligibility Requirements and Subsidy Amount

The housing subsidy amounts to 10 percent of the annual contributions made to a home savings account. Eligible contributions are up to 700 euros per year for single individuals and up to 1,400 euros per year for married couples or registered partners. This results in a maximum subsidy of 70 euros per person or 140 euros per couple per year.

To receive the bonus, your taxable income must not exceed certain limits. Since the income limits were adjusted, they stand at 35,000 euros for single individuals and 70,000 euros for married couples or partners who file jointly. Taxable income is the determining factor, not gross income. Due to income-related expenses, special expenses, and tax-free allowances, taxable income is generally significantly lower than gross salary, meaning that more households benefit from the subsidy than might be assumed at first glance.

The bonus is not paid out directly but is credited to the home savings account. It becomes available only upon allocation of the home savings contract, provided the funds are used for housing-related purposes. Housing-related use includes the construction or purchase of a property, modernizations, renovations, and the acquisition of building land. If the building savings contract is terminated for other purposes before the end of the seven-year commitment period, the entitlement to the bonus generally lapses retroactively, unless the saver is 25 years old or younger at the time the contract is concluded.

Distinction from the Employee Savings Allowance

The Housing Construction Premium is often confused with the Employee Savings Allowance, but these are two different subsidies that can be claimed simultaneously. The Employee Savings Allowance subsidizes capital-forming benefits (VL) that the employer pays into a home savings contract or a fund savings plan. The housing subsidy, on the other hand, supports the home saver’s own savings contributions.

Those who combine both receive both the employee savings allowance on the VL payments and the housing subsidy on the amounts they contribute themselves. The respective income limits are assessed separately, with the limit for the employee savings allowance for home savings contracts also set at 35,000 or 70,000 euros.

A concrete example: Employee A pays 40 euros per month in VL into the home savings contract, and the employer adds 20 euros per month. In addition, A contributes 38 euros per month personally (= 456 euros per year). Result: Employee savings allowance of 9% on a maximum of 470 euros in contributions = max. 43 euros per year; housing subsidy of 10% on 456 euros = 45.60 euros per year. Total government subsidy: nearly 89 euros per year - in addition to the building savings interest.

Application and Tax Classification

The application for the housing construction bonus is submitted via the annual income tax return to the relevant tax office. The building savings bank issues a certificate of the payments made, which is submitted to the tax office. Those who are not required to file a tax return can also submit the application separately to the tax office. The subsidy can be claimed retroactively for up to two years.

The housing subsidy itself is tax-free - it is not counted as income and does not need to be reported as income on the tax return. The subsidized building savings deposits, on the other hand, were made from taxed income; when used for residential purposes, this may lead to further tax planning options within the context of owner-occupied housing.

Housing Construction Premium as a Building Block for Building Equity

The housing construction premium is a particularly useful building block on the path to home ownership for young households. Given the high purchase prices in Nuremberg and the metropolitan region, sufficient equity is a critical success factor-most banks require at least 20% of the purchase price plus ancillary purchase costs as equity. In addition to the housing subsidy, other funding options are available:

• KfW Program 300 (Homeownership for Families): Low-interest loan of up to 270,000 euros for owner-occupied housing
• BayernLabo (BayernHeim): Bavarian housing subsidy for middle-income families
• Employee Savings Allowance: Combination with employer contributions to the home savings contract
• Wohn-Riester: Government subsidy for owner-occupied housing via a Riester building savings contract

Practical Tip for Nuremberg and the Metropolitan Region

For young families and those starting their careers in Nuremberg and the metropolitan region, the housing subsidy can be a useful step toward owning a home. Even though the subsidy may seem modest at a maximum of 70 euros per person per year, it adds up to as much as 490 euros per person over the typical seven-year savings phase of a home savings contract. Combined with the employee savings allowance and the interest from the home savings contract, this creates a solid equity cushion.

We recommend not forgetting to apply for the housing subsidy: The application is submitted as part of your income tax return to the relevant tax office-in Nuremberg, this would be the Nuremberg-North or Nuremberg-South tax office. The application can be submitted retroactively for up to two years, meaning subsidies can still be secured even after the fact. We also advise buyers in the Nuremberg metropolitan region on the appropriate subsidy options and help them combine all available government grants.

Frequently Asked Questions About the Housing Construction Premium

Who is eligible to apply for the housing construction premium?

Any natural person aged 16 or older who is a resident of Germany, makes contributions to a home savings contract, and whose taxable income does not exceed 35,000 euros (single individuals) or 70,000 euros (married couples) is eligible to apply. The subsidy is not limited to employees; self-employed individuals, civil servants, and retirees are also eligible.

How do you apply for the housing subsidy?

The application is submitted via the annual income tax return. The building society issues a certificate of the payments made, which is submitted to the tax office. The tax office verifies the income limits and allocates the subsidy to the building society, which credits the amount to the building savings account. Those who are not required to file a tax return may also submit the application separately to the tax office.

What happens to the subsidy if the building savings contract is terminated early?

If the building savings contract is terminated before the end of the seven-year commitment period and the balance is not used for housing purposes, the housing subsidy must generally be repaid. An exception applies to savers who have not yet reached the age of 25 at the time the contract is concluded. In this case, the subsidy is retained even if the funds are used for other purposes, which makes the housing subsidy particularly attractive for young people.

Can I use the housing subsidy and the Wohn-Riester at the same time?

Yes, the two subsidies are not mutually exclusive, provided that different contracts are used. The Wohn-Riester and the housing subsidy can be claimed simultaneously-however, only one of the two subsidies may be used for the same home savings contract. A combination is possible by entering into two separate home savings contracts.

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