MYHOME REAL ESTATE - THE ORIGINAL SINCE 2014
One of the most common arrangements in anticipatory succession is when parents transfer their home to a child but retain the right to live there until their death. It sounds simple-but it’s legally and fiscally complex. The so-called “usage fee” model adds a monthly payment from the parents to the child, which, depending on how it’s structured, offers tax and statutory inheritance benefits. For homeowners in Neumarkt in der Oberpfalz, a growing city on the outskirts of the Nuremberg metropolitan region, this model is particularly relevant in practice-and often underestimated in its complexity.
The right of residence in rem is governed by Section 1093 of the German Civil Code (BGB). It entitles the holder to use a building or part thereof as a residence, to the exclusion of the owner. It is non-transferable and ends at the latest upon the death of the beneficiary. In contrast to usufruct (§ 1030 BGB), the holder of the right of residence may not rent out the residence-they may only use it themselves.
The right of residence is entered in the land register and is therefore binding on every future owner. If the house is gifted to a child, the parents’ right of residence remains in the land register; although the child is the owner, they cannot sell or rent the house free of encumbrances.
For tax purposes, the right of residence is deducted from the gift value. The Neumarkt i.d.OPf. tax office calculates the capital value of the right of residence pursuant to § 14 BewG: The annual value of the saved rent (local standard rent excluding utilities) is multiplied by the multiplier from the mortality table. For a 65-year-old donor and an annual rent of 15,000 euros, this results in a capital value of approximately 150,000-180,000 euros according to current tables (as of Q1 2026).
The multiplier under § 14 BewG, Annex 9a, is based on age and the assumed interest rate (5.5% according to the BewG). For a 65-year-old man, it is approximately 10.3; for a 65-year-old woman, it is approximately 11.7 (higher life expectancy). These multipliers have been updated since the 2023 reform of guardianship law.
| Scenario | Property Value | Right of Residence Value | Taxable Value | Gift Tax (Child) |
|---|---|---|---|---|
| Unconditional gift | €450,000 | - | €450,000 | €3,500 (7% on €50,000) |
| Gift with right of residence (age 65) | €450,000 | ~€165,000 | ~€285,000 | €0 (below €400,000 exemption) |
| Gift with usufruct (age 65) | €450,000 | ~€210,000 | ~€240,000 | €0 (below the €400,000 exemption) |
| Usage fee model (€450/month) | €450,000 | ~€165,000 | ~€285,000 | €0 + rental income for the child |
| Gift with right of residence (age 70) | €450,000 | ~€130,000 | ~€320,000 | €0 (below the €400,000 exemption) |
Source: BGB §§ 1030, 1093, ErbStG § 7, § 16, BewG § 14 and Annex 9a, Bavarian Justice Portal, Bavarian Chamber of Notaries, as of Q1/Q2 2026.
The usage fee model works as follows: After the gift is made, the parents pay the child a monthly usage fee of 400-600 euros. The child reports this income as rental income for tax purposes (minus depreciation on the building and a proportionate share of financing costs, if applicable). In return, the fee reduces the gift-like nature of the transfer, which may have implications under the law of compulsory inheritance shares-however, the exact effect on the 10-year period under § 2325 BGB must be carefully examined on a case-by-case basis.
The gift with right of residence is processed by the notary in Neumarkt (Notary District of Upper Palatinate, Neumarkt i.d.OPf.) in several steps.
The notary simultaneously certifies the gift and the creation of the right of residence. The deed specifies: the scope of the right of residence (which rooms, shared use of common areas?), who bears the operating costs (usually the holder of the right of residence), maintenance obligations (usually: the owner bears major repairs, the holder of the right of residence bears minor repairs), and the termination of the right (always: death; possibly also: moving into a nursing home after a certain period).
The Neumarkt Land Registry enters the right of residence as a limited personal servitude (Sections 1093(3), 1090 BGB). According to the GNotKG, the registration costs half the fee based on the capital value of the right of residence.
> To accurately calculate the capital value of the right of residence, the notary and tax office require a current market value. The valuation tool from leadmarkt.ch provides a quick initial estimate for properties in Neumarkt.
Under the law of compulsory inheritance, a gift with a right of residence must be treated as follows according to the Federal Court of Justice (BGH) ruling on § 2325 BGB: A registered right of residence (not a complete transfer of assets in an economic sense) is viewed by some courts as an obstacle to the commencement of the limitation period-similar to usufruct. The BGH ruling of June 29, 2016 (Case No. IV ZR 474/15) resolved this issue for usufruct; for the right of residence, the legal situation is less clear-cut and is the subject of ongoing discussion in lower courts in Bavaria and nationwide.
The usage fee model is a deliberate structuring decision: The parents pay a monthly fee for the use of the transferred property. This creates a tenancy agreement between the parents and the child-with all the associated tax consequences.
Tax benefits for the child: The child can claim tax deductions for depreciation on the building (AfA: 2% per year for buildings constructed after 1924) and pro-rata costs (insurance, maintenance expenses). If the rent amounts to at least 66% of the local market rent, the costs are fully deductible. If the rent is lower than this, the costs are only deductible on a pro-rata basis (Section 21(2) of the German Income Tax Act).
Effect on the right to a compulsory share: The fee reduces the gift tax portion of the transfer. If a house is worth 450,000 euros, the right of residence is 165,000 euros, and the monthly fee (present value) is 100,000 euros, the tax gift base is only 185,000 euros-well below the child allowance. The statutory share supplement base is correspondingly lower.
Risk of reclassification: The tax office checks whether the usage fee actually corresponds to an arm’s-length lease. Rents that are too low can lead to reclassification as a mixed gift, which partially negates the tax advantages.
Many owners ask themselves: Is the right of residence or usufruct the better choice? The answer depends on the specific situation:
Right of residence (Section 1093 BGB):
Usufruct (§ 1030 BGB):
Although Neumarkt is located in the Upper Palatinate, it is closely linked to the Nuremberg metropolitan region in terms of both economy and transportation. The 2026 real estate market report shows purchase prices in Neumarkt ranging from €2,700-3,600 per square meter for condominiums and €320,000-480,000 for single-family homes-cheaper than Nuremberg, but with an upward trend.
The Neumarkt i.d.OPf. Local Court serves as the probate court for decedents whose last place of residence was in Neumarkt. For notarizations, the Neumarkt Notary’s Office is available, which is part of the Upper Palatinate notary district. The Neumarkt Tax Office processes gift tax declarations.
A distinctive feature of the region: The proximity to Nuremberg and the relatively affordable land prices have led many older families in Neumarkt to own real estate that is very valuable in relation to their assets. Estate planning with a right of residence is therefore a common topic in Neumarkt notary practice.
Gifting with a right of residence combines a generous transfer of ownership with personal security: the child becomes the owner, while the parents continue to live in the home. The tax advantages resulting from the deduction of the capital value of the right of residence can reduce the gift tax liability to zero. The usage fee model offers an additional level of flexibility but is complex and requires professional guidance.
For all calculations-capital value of the right of residence, statutory share basis, tax liability-the current property value is the key factor. The valuation tool from leadmarkt.ch provides this basis quickly and data-driven-the ideal first step before the notary appointment.
An important detail in practice: The right of residence under § 1093 BGB is a right of use for one’s own residential purposes. If the holder moves permanently into a nursing home, they can no longer exercise the right of residence-and are also not required to pay a usage fee to the owner. However, the right of residence does not automatically expire.
Many transfer agreements therefore stipulate that the right of residence expires if the beneficiary has not used the residence for more than X months (often 12 months). Alternatively, the beneficiary may assign the right of residence-though this is complex in practice.
If this termination clause is missing, the right of residence remains formally registered in the land registry-even if the holder has been living in a nursing home for years. This prevents the owner (the child who received the gift) from renting out or selling the property. At the notary’s office in Neumarkt, this clause is routinely included.
If the child who received the gift later has children of their own, the transfer to the grandchild generation can be tax-optimized: The tax-free allowance for grandchildren is 200,000 euros and is renewed every 10 years (Section 14 of the German Inheritance Tax Act). Those who plan early can save significant amounts in taxes through successive transfers across multiple generations.
At the Neumarkt Notary Office, this multi-generational gifting strategy is becoming an increasingly common topic for larger real estate estates (starting at approximately 600,000 euros). The combination of right of residence, usage fees, and cross-generational transfer planning is a highly specialized area that requires expert advice.
When transferring real estate during their lifetime, parents should definitely incorporate rights of reclamation into the contract. The German Civil Code (BGB) allows the donor, under certain circumstances, to reclaim the gift (Section 528 BGB in cases of impoverishment, Section 530 BGB in cases of gross ingratitude). At Notarpraxis Neumarkt, contractual rights of retransfer are also agreed upon for specific events.
Typical clawback clauses protect the donor:
In the event of insolvency or seizure of the beneficiary child: If the child faces financial difficulties, creditors may seize the property. A contractual right of clawback protects the parents in this case. To be enforceable against third parties, the right of recovery must be entered in the land register as a priority notice of conveyance.
In the event of the child’s divorce: If the child marries and then divorces, the ex-spouse’s claims for equalization of accrued gains may jeopardize the property. A clause allowing for retransfer in the event of divorce safeguards the family’s assets.
In the event of the child’s predecease: If the child dies before the parents, the property would fall into the child’s estate-possibly to the son-in-law or daughter-in-law. A contractual right of reclamation prevents this.
These clawback clauses are a standard component of professionally drafted transfer agreements in Neumarkt and throughout the notarial district of Middle Franconia.
Prepared by the my-home.de editorial team in collaboration with regional real estate analysts. Data as of: Q1/Q2 2026.
The right of residence (Section 1093 of the German Civil Code) entitles the holder only to use the dwelling for their own personal use. Usufruct (Section 1030 of the German Civil Code) additionally permits the holder to rent out the property and collect rental income. In the case of a gift with a right of residence, the property remains the property of the donee, but the donor may continue to live there.
The right of residence is deducted from the gift tax value. Value of the right of residence = annual rent × capitalization factor (based on statistical life expectancy according to the mortality table, § 14 of the Austrian Property Tax Act). This significantly reduces the tax base.
Under the usage fee model, the donor pays a monthly fee to the child who received the gift after the transfer. This generates taxable rental income for the child but reduces the basis for calculating the statutory share supplement, as the consideration diminishes the nature of the gift.
If a reservation of usufruct is agreed upon, the 10-year period under § 2325 of the German Civil Code (BGB) begins, according to prevailing Federal Court of Justice (BGH) case law, only after the death of the usufructuary-not at the time of the gift. In the case of a right of residence, the question of the time limit is less clear-cut; the courts are increasingly distinguishing between different situations.
Yes. Since real estate is being transferred, notarization is required under Section 311b of the German Civil Code (BGB) (transfer of title + agreement). The right of residence is also agreed upon before a notary and entered in the land register. Without notarization, the gift is invalid.
Responsible Editorial
myhome Redaktion
Content researched and verified by the my-home.de expert network - specialized in real estate sales, valuation, and market analysis in Nuremberg, Fürth, Erlangen, Schwabach, and Roth.
Note on content
This guide article serves as general information about the real estate market in Nuremberg and the surrounding region. It does not replace individual tax advice, legal advice, or expert valuation in specific cases. For binding information, please contact a tax advisor, attorney, or certified appraiser.
Market data, prices, and statutory provisions may change at short notice. Despite careful research, we assume no liability for the accuracy, completeness, or timeliness of the content.
Article as of March 1, 2026
Get a free, non-binding valuation - in person or online.
Requirement for Notarial Certification in Forchheim 2026: Section 311b of the German Civil Code (BGB), which real estate transactions require certification, GNotKG costs, rectification, and practice in the Notary District of Middle Franconia.
Read more
Power of Attorney for Real Estate in Nuremberg 2026: Section 1820 of the German Civil Code (BGB), notarization for real estate, general power of attorney, the Guardianship Court, and the Nuremberg Land Registry.
Read more
Transfer Agreement with Care Obligation, Schwabach 2026: Section 311b of the German Civil Code (BGB), care services as consideration, gift tax, rights of recovery, and a notary in Middle Franconia.
Read moreWe're where your property is - across the entire metropolitan region
To guarantee maximum speed in valuation and marketing, we have fully digitized our processes. We advise you exclusively and personally by phone or video call. On-site appointments at your property of course still take place in person. Visits to our headquarters in Weißenburger Str. by prior appointment only.
Talk directly with an expert.
Call - 0911 / 88 18 73 80Send us your inquiry via WhatsApp.
WhatsApp messageWe'll get back to you within 24 hours.
