Baden-Württemberg’s Housing Minister Calls for Comprehensive Tax Incentives for Homeownership
Stuttgart, Germany – Baden-Württemberg’s Housing Minister, Nicole Razavi (CDU), has called for extensive tax benefits for owner-occupied homes.
"So far, the state has only been inadequately promoting subsidized housing construction ex post, but with high and therefore expensive energy requirements," the CDU politician told the German Press Agency (DPA) in Stuttgart. The support is fragmented, complicated, bureaucratic, and short-lived. We need to move away from that."
"Instead, we need more incentives for the broad middle class. The goal must be that the middle of society can once again finance homeownership on its own."
Tax Benefits for Both Rental and Owner-Occupied Housing
Razavi advocated for tax advantages not only for the creation of rental apartments but also for owner-occupied homes. The housing minister suggested introducing a homestead allowance that, similar to the child allowance, reduces taxable income during the repayment phase. This homestead allowance should be supplemented with a family bonus in the form of an allowance for children in the household, graduated according to the number of children, to make homeownership possible for families in particular. This would help young people, in particular, who are just starting their careers or starting a family, to acquire property. "It’s not about a big villa but about a small house or a small apartment," Razavi clarified.
Reaching the Broad Middle Class
With social housing subsidies, only about two percent of the population is reached. It is high time to fundamentally improve the framework for the remaining 98 percent, the CDU politician argued in support of her proposal. "Many people, including and especially in the middle class, now have the problem that they can no longer raise the necessary equity capital." Households should therefore be better supported in building up equity for the first owner-occupied property, the minister demanded.
Expanding Eligibility for Existing Support
Currently, there are the housing construction allowance and the employee savings grant. Both allowances are only paid out if the income limits are not exceeded. For the housing construction allowance, this is a taxable income of €35,000 per year and €70,000 for married couples, while for the employee savings grant, it is €40,000 and €80,000, respectively. "Due to inflation and compensatory wage increases, middle-class households are increasingly falling out of the subsidy system," Razavi noted.
Proposal for Income-Independent Tax Exemption
"Therefore, these households need a tax exemption for the first owner-occupied property as an additional alternative, regardless of income," Razavi said. This would reduce the taxable income by the amount of the household expenditure for building up equity.
