Parents have been eligible for a grant retrospectively since January 1 when they buy or build property. Applications are possible from the coming week. That’s how it’s done.
Familien can apply for the new child allowance from September 18 at the KfW banking group. The Federal Ministry of the Interior announced this on Thursday in Berlin. The first-time construction or acquisition of residential property for families and single parents is eligible for funding. The prerequisite is that at least one child under the age of 18 lives in the household. The grant of 1200 euros per child per year is paid out over 10 years, for a total of 12,000 euros per child. In view of the tense situation on the housing market, this is intended to provide support for families with the purchase or construction of property. Costs of up to ten billion euros are expected for the measure over the entire funding period.
It is similar to the previous home owner’s allowance, which expired at the end of 2005 and at times cost over eleven billion euros a year. The Baukindergeld is granted up to an income limit of 75,000 euros taxable household income per year and an additional 15,000 euros per child – i.e. up to 90,000 euros household income for one child and 105,000 euros for two children. The child benefit is granted retrospectively from January 1, 2018, i.e. for all construction and purchase agreements made since then. “With this we are opening the door to their own four walls for many parents and their children,” said Federal Interior and Construction Minister Horst Seehofer (CSU). “This will also help prevent poverty in old age,” he said, referring to the investment.
Combination with other funding possible
As KfW announced, the application for child benefit should only be submitted after moving in and the sum will then be paid out once a year. Ingrid Hengster, member of the board of directors of the KfW banking group, emphasized that this would “help increase the home ownership rate in Germany”. All information can be found on a dedicated website.
Eligible persons can only apply for the grant after moving in. Then you have three months. The official registration certificate is used as the move-in date. Anyone who moved in before September 18 this year has until December 31 to submit an application. The child or children must not have been older than 18 years on the date of moving in and must be born no later than three months after moving in. The combination with other public funding such as loans, allowances and grants is basically possible, as KfW emphasizes. The total funding may not be higher than the cost of new construction or purchase.
Better tax exemption for real estate transfer tax?
Because the initially agreed funds will not be enough according to calculations by Finance Minister Olaf Scholz (SPD), Scholz and Seehofer had agreed a funding cap on 120 square meters of living space. This meant that a family of four should only receive the building or purchase subsidy of 12,000 euros per child if the property or house no longer has more square meters. Since some families had already signed purchase contracts for larger apartments in anticipation of the allowance, there were sharp protests. In order to keep the sum of money halfway, the deadline for applications was instead limited: There is only money for purchase and construction contracts concluded between January 1, 2018 and December 31, 2020.
The Union had insisted on the allowance, it wants to use it to help young families to realize their dream of having their own four walls. The SPD grudgingly agreed to this in the coalition negotiations in February. Because even low-income workers who still cannot buy an apartment pay the benefit indirectly through their taxes.
The opposition is critical of the project. For example, FDP leader Christian Lindner had demanded that the state should create an allowance for real estate transfer tax rather than an expensive new subsidy. Because the high ancillary purchase costs eat up a large part of the child benefit in view of the high real estate prices.