As title says, as a student in my 20s, are there any pitfals when it comes to (co-)owning (with sibling(s) or parents) a house worth say 500'000€?
Taxes? Less chances of getting student scholarships? Anything else?
2 Answers
For a student in germany, the biggest effect of owning property is on student financial support that you may or may not get:
- BAFöG (education benefits provided by the state) will take that property into account. Exemption limits on personal property are very low, so it will make a difference if you own it or if your parents own it.
- many Studentenwohnheime (social flats for students) will assign flats based on social aspects, including wealth.
- you can get almost any scholarship and any non-financial advantages that come with them. The financial support will, for most german scholarships, be calculated similar to BAFöG though, so you'll have a similar effect.
- since your parents are legally required to pay for your education/alimony as long as you are a student (and not too old), they can claim you on their taxes and/or for any social benefits they may get. If you are wealthy enough on your own (e.g. you could in theory sell your property to pay for your education), that may not apply anymore (although it, practically, doesn't have to have an actual effect for a wide range of income). For this, it can make a difference wether you or your parents own that property (due to the exemption limits).
If you have rental income from that property, there may be some additional effects:
- free student health insurance (Familienversicherung) will, apart from age, depend on your income, so potential rental (and other) income might require you to pay for your own health insurance
- usual practices and guides for students will oftentimes be based on no additional income, and you have to correct for that rental income on your own. E.g. if you have a Minijob, your employer will usually assume you can work to the income limit (currently 450€/month), but with additional rental income, you may lose the free student health insurance, so you may want to work less - which your employer may not like.
The rest applies to every home owner, student or not:
- you may be able to use your personal tax exemption limits and thus not pay taxes on rental income, while your parents would have to pay income tax on it if they owned it - so your family as a whole may pay less taxes.
- you may be legally responsible for e.g. debts of the property
- a lot of other things relevant to home owners in general
The thing that jumps out as the most risky is the bit about "co-owning" the house. This is generally a very bad idea unless you are married to the co-owner living in the house with a close family member. Don't co-sign for a house loan with a boyfriend/girlfriend/roommate/friend, etc. It could destroy your credit and your relationship with them
