Back Rent out the condominium or move in yourself?

The decision to buy an apartment brings with it many questions for the new owner. For most of them it may already be clear that they are buying the property for their own use. But for one or the other, renting is also an option. Especially when the owner has inherited the property, one thing is often difficult to decide: rent the condominium or move in yourself?

The condominium as an investment

At a buying property some costs apply. This raises the question of what is financially worthwhile: rent out the condominium or move in yourself? Because if the owner becomes the landlord himself, he can count on additional income from the rent. For him, this results in further profits that he can invest in financing the apartment or later in other properties. At best, renting out is a good capital investment and a pension.

However, as a landlord you also have ongoing (ie recurring) and unexpected costs. The latter can be for conversions or renovations. But the good news is, these are considered conservation measures (§ 555a, BGB) or as modernization measures (§ 555b, BGB) the landlord can deduct them from the tax. In addition, after completion of modernization measures, e.g. B. the installation of better insulated windows, the annual rent can be increased by 8 percent of the modernization costs (§ 559, Civil Code). The reason for this is the increase in value of the property through these measures. This does not apply to maintenance. In addition, some outputs, such as B. for waste disposal, as apportionable costs to the tenant.

If the rental agreement contains a small repair clause, the tenant can be obliged to assume certain costs for the maintenance of the apartment. This includes small repairs such as B. on taps, door and window handles, shower heads, light switches or sockets. 75 to 100 € are appropriate for such a measure. In individual cases also up to 120 €. The minor repair clause must be recorded in the rental agreement. Otherwise it is not effective. In addition, an upper limit must be specified. According to this, the tenant has to pay a maximum of €150 to €200 per year or 8 percent of the annual rent for all minor repairs.

Move into the condominium yourself

As mentioned above, the owner has a lot of freedom when using the apartment himself, especially with regard to the design. Renovations and conversions of all kinds are possible without prior agreement. If you would like to be creative in your home, living in a condominium is just the thing. Whether a new floor covering or the installation of a bathtub: There are no limits to the creative measures. The owner can renovate his apartment as often and as much as he wants and thus create the ideal (dream) living space. This not only increases the living value, but also the material value of the property.

In addition, the owner-occupier can claim all repairs or modernizations, regardless of whether it is a house or a condominium, as income-related expenses for tax purposes. In principle, only wage and labor costs, the resulting VAT and travel expenses are deductible. The material used cannot be claimed. However, it should be noted that this advantage only applies if the owner lives in the apartment himself and the contract is awarded as a private individual. In addition, the job must be carried out by a craftsman. Costs for independent renovations cannot be deducted.

Another plus point for moving into a condominium is the protection against rent increases or terminations. In addition, the owner only pays the possible loan installment to the bank instead of the rent. Once the apartment has been paid off, only the housing allowance is due. This is paid in monthly advance to the housing management.

The rental: credit conditions, tenants & Co.

Even though renting has many advantages from a financial point of view, there are a few things to consider. When applying for a loan, the bank is also interested in whether the owner rents out the apartment or moves in himself. The rental can possibly have a negative effect on possible credit conditions. Renting is classified by the bank as a risk factor because it is always possible that the rent will not be paid. At best, the owner must be able to prove to the bank that he is able to continue to pay the loan installment even in the event of rent defaults. Then there are no problems with the loan application.

The risk of loss of rent is linked to the choice of tenants. If you are unlucky as the owner, you end up with a tenant who is unreliable or who does not use the apartment properly. All this leads to further costs, which should be taken into account in the financial planning. The owner can B. by opening an additional account for unexpected expenses or missed rent payments or schedule.

The funding

Ideally, the rent received plus a self-determined own contribution is used to repay the loan installment. However, it should be possible for the owner to pay the installment himself in the event of a loss of rent. As mentioned above, it should also be possible to prove this to the bank or credit institution. If you live in the property yourself, the monthly loan installment replaces the rent payment. However, other unexpected costs are possible.

Regardless of whether the owner moves into the condominium themselves or rents it out, precise financial planning is always recommended. You should find out about all costs and expenses in advance and take them into account. So you are protected both as an owner-occupier and as a landlord in an emergency.

For some owners, support programs such as B. that of the KfW in question. There are various types of financial support here: Among other things, support for energy-efficient renovation of real estate or age-appropriate, barrier-free conversion. Such measures can be financed through funding programs. There are also some relevant promotions for the purchase itself. These vary by state. Especially in the area of ​​​​monument protection, owners can be supported by the federal state or other programs with the financing.

Real estate management support

Renting a condominium always involves a lot of administrative work. Regardless of whether it is about securing the rent payments or hiring tradesmen, many owners do not have the time to personally take care of all duties and tasks. Especially if you own multiple properties. But the good news is that this is exactly what property management companies are for.

If you buy an apartment in a house with several owners, there is usually an apartment owners' association (WEG). This is represented by an administrator. But even if the apartment is not part of a WEG, it is advisable as the owner to commission a real estate management company.

An administration helps the owners in many areas (e.g. in the planning and implementation of owners' meetings). Especially in the WEG, meetings with the owners are necessary to coordinate various points relating to the property. Her activities also include the preparation of the house money statement and the utility bills for the tenants. A property management company finds the right craftsmen for the necessary maintenance work. Building cleaning, waste disposal and winter service are also the manager's responsibilities.

First rent then move in yourself?

If the owner has decided to let the property for the time being, he can reverse this decision if necessary and move into the property himself. This requires a termination of the rental agreement for personal use. Enforcing this termination may take a different amount of time depending on where you live.

Tax benefits

Tax issues such as maintenance expenses or income-related expenses have already been mentioned. But there are many other advantages for both investors and owner-occupiers in terms of deducting various costs. From monument AfA to building child allowance: Our next blog post will provide an overview of some important advantages.

Conclusion: Rent out the condominium or move in yourself?

Whether you should rent out the condominium or move in yourself depends on your own financial situation and the goals you are pursuing with the apartment. If an owner already lives in a condominium and now wants to buy a second one, the option of renting it out is obvious. But even if you still live for rent yourself, renting out the property can be an advantage. Above all financially, the owner can increase his profits through the monthly rental payments. But the tax advantage and the apportionment of the modernization costs also speak in favor of renting.

Moving into the apartment yourself can bring the advantage of independence when it comes to renovation matters. The owner can design the apartment freely according to his wishes and thus increase the quality of living. Once the apartment has been paid off at the bank, you only have to pay the housing allowance (including operating and ancillary costs) to the administration. Otherwise you live rent-free.