Subsidies for building a house – the state pays as well

Building a house or even buying and renovating one is an enormous financial burden for most people. But there are a variety of subsidies that can be important building blocks in real estate financing.

Builders in germany have a greater number of funding options available – many of them for energy-efficient technology and renewable energies. Some others promote home ownership, especially energy-efficient home ownership. In this way, the state compensates in part for increasingly stringent standards and regulations that are making building more and more expensive. The two most important subsidy providers are the kfw bank and the federal office of economics and export control (BAFA).

For builders, this is an opportunity. It is worthwhile to check subsidy programs and, if necessary, to use them to finance your own property. The conditions of the most important nationwide subsidy programs are regulated in the federal subsidy for efficient buildings (BEG).

BEG – uniform promotion of efficient buildings

The federal subsidy for efficient buildings regulates the funding of the construction or renovation of energy-efficient buildings. What builders should bear in mind. Read on

Kfw funding programs & BEG funding

The kreditanstalt fur wiederaufbau, or kfw for short, provides funding for private individuals as well as companies and their construction projects.

From the 20. April 2022 there was a kfw funding program for a short time, but the funding pot was already exhausted after three hours. There is, however, a successor program in which only the eh40plus efficiency standard is subsidized. This program also expires at the end of 2022. From january 2023, the subsidy will then be restructured.

Ownership promotion and energy efficient building

The most extensive support for builders is available in the form of the kfw home ownership program and the BEG support for kfw efficient houses. The home ownership program provides a loan of a maximum of 100.000 euros. Under the BEG subsidy there is even up to 150.000 euros. The two programs can be combined so that builders can obtain a loan totaling 250.000 euro can be applied for. In addition, there are redemption subsidies of up to 37.500 euro.

In addition, there is the possibility to pay only interest during the first years of the loan term and to defer the repayment of the loan. This means that builders have a lower burden during this time and more money is available, for example, to create the outdoor facilities.

The kfw loan is particularly worthwhile if builders qualify for the repayment subsidy. Otherwise, some lenders offer better conditions, especially in periods of low interest rates. In addition, there is a certain financing risk, because the fixed interest rate is fixed for a maximum of ten years.

The conditions are simple:

  • The homeownership program is for people who buy or build a property to live in it themselves. Close relatives may also occupy the property, provided that this is done free of charge. The property may not be rented out.
  • BEG promotes the construction of buildings that use less energy than the legal standard requires.

Renovation funding

Those who already have a house, but want to renovate it in an energy-efficient way, can also apply for a loan. For the complete renovation to the kfw efficiency house there is a loan of maximum 150.000 – which does not have to be repaid in full. Depending on the efficiency standard achieved and the loan amount, a repayment subsidy of up to 75 percent is available.000 euros as a gift.

You can find more information about the funding programs on the overview page of the kfw.

Kfw efficiency houses

Sooner or later, anyone seeking kfw funding for new construction will come across the so-called kfw efficiency houses. We have gathered the most important info. Read more

Other kfw subsidy programs

For real estate owners, the subsidy program for individual measures for burglary protection or barrier reduction is also interesting. For example, if homeowners install secure front doors, safety gates or burglar alarms, or if they make the bathroom handicapped accessible or install a stair lift, they receive a loan of a maximum of 50.000 euro.

Apply for subsidies

Kfw subsidies can only be applied for with the help of a financing advisor, for example at a savings bank, insurance company, construction financer or your own bank. He takes care of the formalities and also knows which programs can be combined. If a loan or grant is tied to a specific energy efficiency standard, the borrower must submit a corresponding confirmation from an energy consultant or the commissioned specialist company after completion of the construction measure.

BAFA: BEG funding for individual measures

The kfw bank is the largest promoter of renewable energies and private builders – the federal office of economics and export control (BAFA) also plays an important role. Within the framework of the BEG, BAFA is primarily responsible for promoting individual measures to increase the energy efficiency of a building.

  • Insulation measures on the building envelope such as new facade insulation or window replacement.
  • The installation of plant technology such as ventilation systems with heat recovery or cooling technology.
  • New heating systems such as heat pumps or solar thermal systems.
  • The heating system replacement, provided that an old oil heating system is replaced by a subsidized new heating system.
  • Heating optimization, such as insulation of heating pipes, hydraulic balancing or optimization of heat pumps.
  • The accompaniment of the measures mentioned so far by an energy consultant.

The subsidy for these measures amounts to between 20 and 50 percent of the eligible investment sum.

Apply for subsidies

BAFA subsidies must be applied for using multi-page forms that can be uploaded and managed on a subsidy portal. The documents must be filled out or prepared partly by the applicant and partly by the respective installer.

Further information on BEG funding for individual measures can be found on the bafa website.

Tax-based renovation subsidies

The federal ministry of finance promotes the climatic renovation of real estate through a tax relief program, the so-called climate protection program. Funding is available for insulation measures, the renewal or optimization of the heating system, new windows and the installation of a ventilation system, for example. 20 percent of the costs up to a maximum amount of 40.000 euros are tax-deductible over three years.

For example, if you renovate your house for 150.000 euros, can receive twenty percent of this amount, i.E. 30 percent.000 euros, tax deductible over three years. This means that the taxable income must be reduced by 10 % in three consecutive years.000 euros sinks.

Apply for subsidies

The subsidies do not have to be applied for in the true sense of the word. Instead, the costs are simply reported on the income tax return. Confirmation from the specialist company that carried out the work or from an energy consultant serves as proof. For this both must use a certain sample notice. The subsidies can be claimed for the first time with the income tax return for 2020.

Further information on the climate protection program can be found on the website of the german federal ministry of finance.

Subsidy programs offered by regional development banks

In addition to the kfw, the individual federal states each have their own development banks. Most of them promote the purchase of residential property. These loans are often linked to conditions such as a certain apartment size or a maximum income.

Some others offer additional loans for various modernization or renovation measures, such as the installation of a photovoltaic system or an efficient heating system:

For the remaining countries, the subsidy programs differ slightly:

  • The sachsische aufbaubank (SAB) in addition to the home ownership program there is a supplementary loan to close financing gaps. For example, if building owners receive a kfw or other subsidized loan, but this money is insufficient.
  • In addition to the home ownership program, the hamburgische investitions- und forderbank also offers loans to close financing gaps and loans for energy-efficient heating systems.
  • The investitionsbank berlin does not promote the acquisition or the building of residential property. The renovation and modernization, on the other hand, does.
  • The thuringer aufbaubank does not offer a housing subsidy program. Instead, photovoltaic systems are subsidized with grants, the amount of which depends on the performance and equipment of the photovoltaic system.
  • The mecklenburg-vorpommern state development institute also does not offer a subsidy program for owner-occupied housing and only grants loans for the renovation or modernization of living space.

Apply for subsidies

The subsidies must be applied directly to the respective development bank. This is done partly via forms, partly the applicants have to go to certain offices.

Housing subsidy, "wohn-riester" and building savings

Home savings contracts are financing products for which there are state allowances:

  • The housing subsidy amounts to 70 euros for singles, married couples receive 140 euros per year. The money is paid directly into a building savings contract. If the money saved is not later invested in real estate, the premium must be repaid. The bonus is only available if the taxable income in the year under 35.000 euros, or in the case of married couples under 70.000 euros.
  • The wohn-riester is also a state allowance that is paid into a wohn-riester product. This can be a riester building savings contract or a riester loan. The basic allowance amounts to 175 euros per year; depending on the date of birth, each child receives an additional 185 or 300 euros per year.

Applying for subsidies

In order to receive the subsidies, a corresponding contract must be concluded, for example, a building savings contract with riester subsidy. The allowance must be applied for annually. In order to receive the wohn-riester, you must also save a certain minimum amount per year.

Subsidies as a building block of real estate financing

The various subsidies can basically be used as a building block of real estate financing, in part also combined. However, certain loans are subject to conditions, as is the case with the NRW.Bank is the case or also with kfw loans. Building owners should discuss with their construction financier whether a subsidy product can be sensibly integrated into the financing plan. It is important, for example, to keep an eye on the different loan periods and installment payments. For example, a building savings loan, which usually has to be paid off quite quickly, can be coordinated with the redemption-free years of a kfw loan. Building owners should also calculate carefully whether it is actually worthwhile to aim for a higher kfw efficiency house standard simply because this means that higher subsidies can be collected.