Transferring a House to Your Children: Gift with Usufruct or Right of Residence
Many parents want to hand over their house or flat to their children during their lifetime and still go on living in it. Legally, this is usually a gift that a notary must notarise. With a usufruct (Nießbrauch) or a right of residence (Wohnungsrecht), the parents keep the use of the property. Which solution fits depends mainly on whether the house may need to be let later and how the parents want to treat the siblings.
Table of contents
At a glance – transferring a house to your children
- Form: Transferring a house to your children is usually a gift in legal terms. A notary must notarise the contract. The child only becomes the owner once registered in the land register.
- Use: With a usufruct, the parents may continue to live in the house or let it. A right of residence only allows them to live there themselves, and the parties can limit it to individual rooms. The land register records both rights, and both end on death.
- Periods: There are three ten-year periods with different starting points. With a usufruct over the whole house, the period for the compulsory share does not start. The period for a claim by the social welfare office runs regardless.
- Tax: Each child can receive 400,000 euros tax-free from each parent every ten years. The tax office deducts the value of the usufruct or right of residence from the value of the house.
- Costs: For a house worth 500,000 euros with a usufruct and a priority notice for reconveyance, notary and land registry together cost around 3,730 euros, without an execution fee. No real estate transfer tax is payable for children and children-in-law.
- Contract: Rights to reclaim the property, the allocation of costs and any crediting or equalisation between siblings belong in the contract. Nobody can settle them unilaterally afterwards.
What does "transferring a house" mean?
In German, “Haus überschreiben” is the everyday term for transferring a property during one’s lifetime. If the house goes to the children, lawyers call this anticipated succession (vorweggenommene Erbfolge): the children receive now what they would otherwise only receive on inheritance. Legally, it is usually a gift. The contract is called a transfer agreement (Übertragungs-, Überlassungs- or Übergabevertrag) and requires notarisation (section 311b (1) BGB). The child only becomes the owner once registered in the land register (sections 873, 925 BGB).
A transfer and a gift are therefore not opposites. If the child takes on obligations, such as caring for the parents or taking over a loan, the classification depends on the individual case. It may be a gift subject to a condition (section 525 BGB), a mixed gift where only part is free of charge, or a contract for consideration. Tax, compulsory share and reclaim all depend on this.
If the parents are married under the statutory matrimonial property regime and the house makes up almost all of their assets, the transfer requires the consent of the spouse (section 1365 BGB).
If several family members hold a property together, a family partnership (GbR) is also an option. For what this means for the land register, see the article eGbR and property.
For the services the office offers for gifts, see the page Property gift transfer.
Is it possible without a notary?
No. The parties must declare the transfer agreement and the conveyance before a notary (section 311b (1), section 925 BGB). The land registry only makes entries on the basis of notarial deeds (section 29 GBO). This also applies to a usufruct or a right of residence.
Usufruct or right of residence: what is the difference?
With a usufruct, the parents may live in the house themselves or let it and keep the rent. A right of residence only allows them to live there themselves, together with family and carers, and the parties can limit it to individual rooms. The land register records both rights; neither can pass to another person, and both end on death.
What is a usufruct?
A usufruct is the right to take all the benefits of a property (section 1030 BGB). The parents can live there themselves, let it and keep the rent. The child is the owner. The child may sell the house, but the usufruct remains as an encumbrance.
What is a right of residence?
German law calls it Wohnungsrecht. It allows the holder to use a building or part of it as a home, to the exclusion of the owner (section 1093 BGB). The holders may take in family members and carers. They may only let the property if the contract allows it (section 1092 BGB). Parties often agree on it only for one flat in the house or for individual rooms.
| Usufruct | Right of residence | |
|---|---|---|
| Legal basis | sections 1030 et seq. BGB | section 1093 BGB |
| Land register | yes, Section II | yes, Section II |
| Living there themselves | yes | yes, with family and carers |
| Letting and keeping the rent | yes | only if the contract allows it |
| Only part of the house | only with a special arrangement | yes, individual rooms or one flat |
| Ordinary maintenance | the holders (section 1041 BGB) | the holders (sections 1093, 1041 BGB) |
| Roof, heating, major repairs | not the holders; the contract should settle this | not the holders; the contract should settle this |
| Property tax and building insurance | internally the holders (sections 1045, 1047 BGB) | the child, unless agreed otherwise |
| Transferable or inheritable | no | no |
| Move to a care home | letting possible, the rent belongs to the parents | the right remains, no obligation on the child to let |
| Siblings’ compulsory share period | over the whole house: does not start | over part of the house usually yes, over the whole house case by case |
Right of residence in the land register or only in the contract?
The parties can also agree on a right of residence only in the contract, without entry in the land register. It then binds only the parties to the contract. If the child sells the house, it does not protect the parents. A registered right of residence, by contrast, is effective against every later owner. Whether it also survives a compulsory auction depends on its rank in the land register.
Which solution fits which situation?
- Letting: If it should be possible to let the house later, for example after a move to a care home, the usufruct allows this. With a right of residence, the contract must permit it.
- Part of the house: If the parents only live in one flat in the house, the parties can limit the right of residence to exactly that.
- Compulsory share: If the gift should soon stop counting towards the siblings’ compulsory share, a right of residence over part of the house is the better fit. There the period usually starts with the entry, with a usufruct over the whole house not at all.
- Running costs: With a usufruct, the parents pay property tax and insurance. With a right of residence, these stay with the child unless agreed otherwise.
- Protecting both parents: If the house belongs to one parent alone, a usufruct or right of residence for that parent ends on their death. If the other parent is to go on living in the house, the contract must also grant the right to them, either jointly or for the time after the owner’s death. The tax consequences should be clarified with a tax adviser.
In the initial meeting, the notary explains to parents and child what the options mean for both sides.
Who pays what while the parents live in the house?
Unless otherwise agreed, the holders bear the ordinary maintenance, that is minor repairs and routine renewals (section 1041 BGB). With a usufruct, they also pay property tax, building insurance and the interest on existing land charges in relation to the child (sections 1045, 1047 BGB). With a right of residence, property tax and insurance stay with the child.
The holders of a usufruct do not have to pay for a new heating system or a new roof, even though many people assume so. A complete renewal is not part of ordinary maintenance, unlike the replacement of individual worn parts (Federal Court of Justice, judgment of 6 June 2003, V ZR 392/02). However, the law does not oblige the child to pay for it either. Without a provision in the contract, nobody has to pay.
Towards the tax office, the owner always owes property tax (section 10 GrStG). The allocation under section 1047 BGB only applies between parents and child.
An existing loan does not pass to the child with the house. The land charge remains in the land register, and the parents remain the borrowers. If the child is to take over the loan, the bank must agree (section 415 BGB).
That is why the contract should state expressly who bears major repairs, modernisation, interest and repayments.
What happens if the parents need care?
If the parents’ income later does not cover care or a care home, they can reclaim the gift if they become needy within ten years of the transfer (sections 528, 529 BGB). If the social welfare office pays, it can transfer this claim to itself (section 93 SGB XII). A reserved usufruct does not change this period.
The period starts as soon as the notary has notarised the contract, the parties have declared the conveyance and the land registry has received the application for transfer of ownership, also in the child’s name. The entry itself does not matter (Federal Court of Justice, judgment of 19 July 2011, X ZR 140/10). Unlike the compulsory share, nothing tapers off here: within the ten years the parents can reclaim the entire gift, afterwards nothing. The child can avoid returning the property by paying the missing maintenance (section 528 (1) BGB).
Usufruct and a care home
The parents can let the house. The rent belongs to them and counts as income for social assistance.
Right of residence and a care home
The right of residence does not end if the parents move into a care home permanently. The child does not have to let the rooms (Federal Court of Justice, judgment of 9 January 2009, V ZR 168/07). If the child lets them anyway, the rent may belong to the parents (Federal Court of Justice, judgment of 19 January 2007, V ZR 163/06). It then counts as income for social assistance. The parents may only let the rooms themselves if the contract allows it. The contract should therefore set out what applies on a move to a care home.
Does the 100,000-euro threshold protect the children?
Not against a reclaim. The income threshold of 100,000 euros only applies to maintenance claims against children (section 94 (1a) SGB XII). Reclaiming a gift is not a maintenance claim.
Waiving the usufruct or right of residence
If the parents later waive their usufruct or right of residence without anything in return, for example when moving into a care home, this may be a new gift for which a new ten-year period runs. Have such a waiver checked beforehand.
Which ten-year periods apply?
With a gift, three ten-year periods run: for gift tax, for the siblings’ compulsory share and for a reclaim if care is needed. They start at different times.
| Period | starts with | effect of usufruct or right of residence | consequence |
|---|---|---|---|
| Gift tax (section 14 ErbStG) | the execution of the gift, for a house usually the notarisation with conveyance and consent to registration | none | All acquisitions from the same person within ten years are added together, including a later inheritance. After that, the full tax-free allowance is available again |
| Siblings’ compulsory share (section 2325 (3) BGB) | the entry in the land register | usufruct over the whole house: the period does not start. Right of residence: over part of the house usually from the entry, over the whole house case by case | The gift counts 10 percent less each year and not at all after ten years |
| Reclaim due to impoverishment (section 529 BGB) | receipt of the application for transfer by the land registry, once contract and conveyance have been notarised | none | If the parents only become needy after ten years, a reclaim is excluded |
Siblings' compulsory share: tapering
When the parent who gave away the house dies, the other children may have a claim to supplement their compulsory share (Pflichtteilsergänzungsanspruch). The gift counts one tenth less for each year (section 2325 (3) BGB).
| Death after the entry | without usufruct | with a reserved usufruct over the whole house |
|---|---|---|
| in year 1 | 100% | no tapering |
| in year 2 | 90% | no tapering |
| in year 5 | 60% | no tapering |
| in year 10 | 10% | no tapering |
| after 10 years | 0% | no tapering, the period only runs from the end of the usufruct |
The table only shows how the period works. The value at which the house counts, and whether the usufruct reduces it, is a separate question (section 2325 (2) BGB).
With a usufruct over the whole house, the period does not start because the parents continue to benefit economically from the house (Federal Court of Justice, judgment of 27 April 1994, IV ZR 132/93). With a right of residence, it depends on the arrangement. Over part of the house, the period usually starts with the entry. If the right of residence covers practically the whole house, it depends on the individual case (Federal Court of Justice, judgment of 29 June 2016, IV ZR 474/15).
What happens if the parents die before the ten years are up?
For the compulsory share, the gift then counts proportionally, and without tapering with a usufruct over the whole house. For gift tax, the tax office adds the gift and the inheritance together if both come from the same person within ten years (section 14 ErbStG). The tax-free allowance then applies only once to both together.
In addition, the tax office can reduce the deduction for the usufruct afterwards if it only existed for a short time. The gift tax section below shows how this works.
Treating siblings equally: crediting, equalisation, waiver
There is no obligation to treat siblings equally. Parents may favour one child. Only the compulsory share protects the siblings. Anyone who wants to balance things out has three options, which differ:
- Crediting against the compulsory share: The child receiving the gift must have it credited against their own compulsory share (section 2315 BGB).
- Equalisation between siblings: If the children later inherit under statutory succession, the gift counts when the heirs divide the estate (section 2050 (3) BGB).
- Equalisation payment: The child receiving the gift pays their siblings an amount now.
The parents must determine crediting and equalisation at the time of the transfer. The parents cannot impose them unilaterally afterwards. Both therefore belong in the transfer agreement.
The siblings can also take part:
- Waiver of the compulsory share: The siblings waive their compulsory share, which can be limited to the house. A notary must notarise the waiver (sections 2346 (2), 2348 BGB).
If the parents have a binding joint will or an inheritance contract, gifts may impair the heirs named there (section 2287 BGB). Check this before the transfer. More on the pages Inheritance law and Notarised will.
Rights to reclaim: when the house goes back to the parents
The law only allows a reclaim in a few cases, above all impoverishment and gross ingratitude (sections 528, 530 BGB). That is why parents usually agree further grounds in the contract. A priority notice for reconveyance (Rückauflassungsvormerkung) in the land register secures them (section 883 BGB), which is also effective in the child’s insolvency (section 106 InsO).
Typical contractual grounds for a reclaim:
- The child dies before the parents.
- The child sells or encumbers the house without the parents’ consent.
- Creditors of the child enforce against the house, or a court opens insolvency proceedings over the child’s assets.
- The child’s marriage ends in divorce.
- The child develops an addiction or becomes legally incapacitated.
For how a priority notice works in the land register, see the article Priority notice of conveyance.
A right of reclaim that can be exercised entirely at will may jeopardise the start of the compulsory share period. This is disputed, so check it in the individual case.
When the child's spouse is also registered
No real estate transfer tax is payable in this case either (section 3 no. 6 GrEStG). For gift tax, however, children-in-law fall into tax class II with an allowance of only 20,000 euros (sections 15, 16 ErbStG). If the marriage fails, the parents can usually only reclaim part of a gift to the child-in-law (Federal Court of Justice, judgment of 3 February 2010, XII ZR 189/06). A reclaim clause for divorce or a prenuptial agreement can settle this in advance.
Gift tax: how usufruct and right of residence work
Each child can receive 400,000 euros tax-free from each parent within ten years (sections 14, 16 ErbStG). If the parents reserve a usufruct or right of residence, the tax office deducts its capital value from the value of the house. It equals the annual value times a multiplier that depends on age and sex (section 14 BewG).
The annual value is the net yield: the rent received or the local comparable rent, less the costs the parents bear as holders, such as property tax or interest on an existing loan (Federal Fiscal Court, judgment of 28 May 2019, II R 4/16). Its cap is the value of the house divided by 18.6 (section 16 BewG).
Multipliers for lifelong uses from 1 January 2026 (Federal Ministry of Finance circular of 21 October 2025, extract):
| Age | Women | Men |
|---|---|---|
| 65 | 12.583 | 11.444 |
| 70 | 11.107 | 9.938 |
| 72 | 10.447 | 9.293 |
| 75 | 9.393 | 8.282 |
| 80 | 7.490 | 6.509 |
An example: a 72-year-old mother transfers her house worth 500,000 euros to her daughter and reserves a usufruct. The annual value, that is the local comparable rent less the mother’s costs, is 18,000 euros. The cap is 26,881.72 euros (500,000 euros divided by 18.6), and the annual value stays below it.
| Step | Calculation | Result |
|---|---|---|
| Capital value of the usufruct | €18,000 × 10.447 | €188,046 |
| Value of the gift | €500,000 − €188,046 | €311,954 |
| Daughter’s tax-free allowance | − €400,000 | €0 |
| Gift tax with usufruct | €0 | |
| for comparison, without usufruct | (€500,000 − €400,000) × 11% | €11,000 |
The example applies if the house belongs to one parent alone. If it belongs to both parents in equal shares, the child has a separate allowance for each parent. In the example, no tax would then be payable even without a usufruct.
If the parents die early: recalculation
If the usufruct ends through death after a short time, the tax office recalculates the deduction on the basis of its actual duration. For people aged over 70 and up to 75, this applies if the usufruct has lasted no more than five years (section 14 (2) BewG). If the mother in the example dies after three years, the tax office calculates as follows:
| Step | Calculation | Result |
|---|---|---|
| Usufruct for three years | €18,000 × 2.772 | €49,896 |
| Value of the gift | €500,000 − €49,896 | €450,104 |
| After the allowance | − €400,000 | €50,104 |
| Rounded down to full 100 euros | €50,100 | |
| Gift tax payable afterwards | €50,100 × 7% | €3,507 |
In addition, the tax office adds the gift and the inheritance together, as described above.
How does the tax office learn of the gift?
The notary reports every notarised gift to the tax office (section 34 ErbStG). The tax office can then request a tax return (section 31 ErbStG).
Your tax adviser can best clarify how the tax office determines the tax value of your house, whether a valuation report makes sense and what the income tax consequences are.
What does it cost to transfer a house?
For a house worth 500,000 euros with a usufruct and a priority notice for reconveyance, notary and land registry together cost around 3,730 euros, without an execution fee. That is 0.75 percent of the value. The Court and Notary Fees Act (GNotKG) sets the fees, and they are the same at every notary. No real estate transfer tax is payable on a transfer to children.
Like the tax example, this example assumes a 72-year-old mother as sole owner and an annual value of the usufruct of 18,000 euros. The notary fee is based on the market value of the house; the notary does not deduct the usufruct from it. For younger parents, the value of the usufruct and the right of reclaim together can be higher than the market value. That higher value then applies (section 97 (3) GNotKG).
| Notary | Calculation | Amount |
|---|---|---|
| Notarisation of the transfer agreement (KV 21100) | 2.0 × €935 | €1,870.00 |
| Expenses: postage, land register searches, copies (estimated) | €45.00 | |
| VAT 19% | €363.85 | |
| Fee of the electronic deed archive | €4.50 | |
| Notary total | €2,283.35 |
| Land registry | Calculation | Amount |
|---|---|---|
| Registration of the child as owner (KV 14110) | 1.0 on €500,000 | €935.00 |
| Registration of the usufruct (KV 14121) | 1.0 on €90,000 | €246.00 |
| Priority notice for reconveyance (KV 14150) | 0.5 on €250,000 | €267.50 |
| Land registry total | €1,448.50 |
The law values the usufruct at five times its annual value because the mother is over 70, here 5 × 18,000 euros (section 52 GNotKG). If no annual value can be determined, 5 percent of the property value applies, here 25,000 euros. The fee for the usufruct would then rise to 300 euros. The priority notice for reconveyance counts at half the value of the house (sections 45, 51 GNotKG).
If the notary obtains approvals, for example that of the property manager for a condominium, an execution fee comes on top. The costs then rise to around 4,290 euros. You can make a first calculation of your own with the fee calculator of the Federal Chamber of Notaries (in German).
Is real estate transfer tax payable?
No, if children, grandchildren, stepchildren or children-in-law receive the house (section 3 nos. 2 and 6 GrEStG). For other people, such as nieces, nephews or unmarried partners, real estate transfer tax may be payable on the value of a reserved usufruct or of debts taken over, 6 percent in Berlin. More on real estate transfer tax in the article Additional purchase costs in Berlin.
Who pays the costs?
Everyone whose declarations the notary has notarised is liable to the notary (section 30 GNotKG). The contract sets out who bears the costs internally. Often the child receiving the gift pays them.
The process with a notary in Berlin
After an initial meeting, the notary drafts the transfer agreement. At the appointment, the notary reads it out and the parties sign it. The notary then applies for the entries in the land register and reports the gift to the tax office.
- Initial meeting and documents: Parents and child decide between usufruct and right of residence, which grounds for reclaim to include and how the parents want to treat the siblings.
- Draft: The notary drafts the contract. The parties review it and request any changes.
- Notarisation: The notary reads out the contract and the parties sign it. Conveyance, usufruct or right of residence and the priority notice for reconveyance are all part of the same deed.
- Execution: The notary applies for the entries, obtains any required approvals and reports the gift to the tax office.
- Land register: The land registry enters the child as owner, and the usufruct or right of residence and the priority notice in Section II.
- Tax office: It requests a gift tax return where applicable.
For the initial meeting you will need:
- identity documents and tax identification numbers of everyone involved
- details of the property or flat; the notary obtains the land register extract directly
- for condominiums, the declaration of division and the contact details of the property manager
- details of existing land charges and loans
- details of other children, the spouse and the matrimonial property regime
- previous gifts to the same child in the last ten years
The two-week period for the draft contract does not apply here. It only concerns contracts between businesses and consumers (section 17 (2a) BeurkG). A gift does not require a negative certificate on the right of first refusal.
Practical tip: Before the appointment, decide who pays for the roof, the heating and other major repairs while you live in the house. Without a clause in the contract, neither the child nor the parents have to pay.
Prepare the transfer of your property
Would you like to transfer your house or flat in Berlin to your children? Send us the key details and we will get back to you with the next steps.
Frequently asked questions: transferring a house to your children (FAQ)
Which is better, a usufruct or a right of residence?
It depends on the goal. A usufruct fits if the house may need to be let later, for example after a move to a care home. A right of residence fits if the parents only want to live there themselves or only part of the house is concerned. With a usufruct over the whole house, the siblings’ compulsory share period does not start.
Can you transfer a house without a notary?
No. A notary must notarise the transfer agreement and the conveyance (section 311b (1), section 925 BGB). The land registry only makes entries on the basis of notarial deeds (section 29 GBO).
What does it cost to transfer a house with a usufruct?
For a value of 500,000 euros and a 72-year-old mother, 2,283.35 euros for the notary and 1,448.50 euros for the land registry, around 3,730 euros in total without an execution fee. No real estate transfer tax is payable for children.
What happens if the parents die within ten years?
For the siblings’ compulsory share, the gift counts proportionally, and without tapering with a reserved usufruct over the whole house. For gift tax, the tax office adds the gift and the inheritance together (section 14 ErbStG). In addition, the tax office reduces the deduction for the usufruct afterwards if it only existed for a short time, for people aged over 70 and up to 75 no more than five years (section 14 (2) BewG).
May the child sell the house despite the usufruct?
Legally yes; the usufruct remains as an encumbrance. A contractual right of reclaim with a priority notice for reconveyance ensures that the parents can demand the house back if the child sells it without their consent.
Who pays the property tax with a usufruct?
Towards the tax office, the owner, that is the child (section 10 GrStG). Between parents and child, it is borne by the holders of the usufruct (section 1047 BGB). With a right of residence, it stays with the child unless agreed otherwise.
What happens to the right of residence if the parents have to move into a care home?
It remains. The child does not have to let the rooms. If the child lets them anyway, the rent may belong to the parents. The parents may only let them themselves if the contract allows it. If the parents become needy within ten years of the transfer, the social welfare office can reclaim the gift (sections 528, 529 BGB, section 93 SGB XII).
Is gift tax payable on a gift with a usufruct?
Only if the value of the house less the capital value of the usufruct exceeds the tax-free allowance. The allowance is 400,000 euros per child and parent within ten years. The capital value is the annual value times a multiplier, in 2026 for example 10.447 for a 72-year-old woman.
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Transfers within the family with a notary in Berlin
The notary notarises the transfer agreement impartially for parents and child and explains the consequences to both sides. You can send us the key details of a transfer using the request form.
