What is the purpose of a life-long right of residence?

A life-long right of residence allows people to occupy a property without owning it or paying rent for it. Securing this right can make sense in various situations, such as in the case of a gift or real estate retirement. There are a few details to keep in mind. So how does this work with the lifelong right of residence?

Rents are rising and living space is in short supply. That's why many people - especially seniors - are wondering how they can secure their living space even if they sell or dispose of their own property. A lifelong right of residence is the solution here. Anyone who owns this right is allowed to live in the house or apartment in question until the end of their life, even if they are not (or no longer) the owner. The right of residence is firmly tied to the property. If the property is sold again, the owner of the right of residence can still live there.

Gift or annuity

A lifelong right of residence can be agreed, for example, if parents wish to transfer their house to their child in order to save inheritance tax and still remain living in it. Another option is real estate annuity. Here, owners can turn their property into an "annuity made of stone" - and remain living in it with a lifelong right of residence. You can receive the money for your property as a one-time payment or as a monthly annuity - or even as a hybrid of the two.

Register the right of residence in the land register

Anyone who owns a right of residence should have it entered in the land register. This is the only way to ensure that it is legally secure. If it is not entered in the land register, it can be challenged or even revoked in the event of a change of ownership, for example. If, on the other hand, the lifelong right of residence is entered in the land register, it cannot be withdrawn or terminated by the holder. In addition, it makes sense to have a right of reclaim granted. In this way, the property can be reclaimed if the children to whom it was transferred by way of a gift become insolvent. The property is then protected from execution and goes back to the parents instead.

Usufructuary right instead of residential right

In contrast to the right of residence, the usufructuary right includes a right to use a property. This right makes sense, for example, if the owner of the right of residence becomes dependent on care and has to be looked after in a nursing home. In that case, the right of residence is of little use to him. The usufructuary right, on the other hand, also allows him to rent out the rooms he cannot or does not want to occupy himself. With the rental income, he may be able to finance the costs of care, but even if he emigrates or is absent from his place of residence for a longer period of time, the rental will still provide him with a source of income. However, the holder of the usufructuary right also bears the economic responsibility for the property and must assume the management and maintenance costs incurred.

Would you like to know whether lifetime living rights are worthwhile for you and your property? Contact us! We will be happy to advise you.


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Legal Notice: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific individual case clarified by a lawyer and/or tax advisor.



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