Definition and Introduction to the Baukindergeld
The Baukindergeld is a government subsidy provided by the Federal Republic of Germany, which supported families with children and single parents in acquiring owner-occupied residential property for the first time as part of housing promotion. The focus of the program was on creating housing for personal use, with the primary aim of facilitating property acquisition for families with lower incomes. The benefit could be applied for in the form of a grant through the KfW (Kreditanstalt für Wiederaufbau).
The Baukindergeld was introduced in 2018 as part of the German federal government’s housing initiative and was designed as a temporary measure. The program officially ended for new construction applications on March 31, 2021.
Legal Basis of the Baukindergeld
Legal Framework
The legal design of the Baukindergeld was set out by guidelines for the promotion of Baukindergeld through KfW on behalf of the federal government. The regulation was not based on a separate law, but rather on the approval of funding within the federal budget and corresponding guidelines issued by the Federal Ministry of the Interior, Building and Community (BMI). The KfW acted on the basis of these public-law guidelines.
The legal bases were also bindingly stipulated in the KfW’s funding conditions and information sheets, which were decisive as part of the application and payment process for the Baukindergeld.
Funding and Use of Funds
The funding of the Baukindergeld came from the federal budget in the form of grants. The use of the funds was tied to the purpose of creating or acquiring owner-occupied residential property for families with children or single parents with a child (§ 31 Basic Law – task of housing promotion).
Eligibility Requirements and Prerequisites
Eligible Groups
Eligible were natural persons who
- at the time of application had at least one minor child living in the household for whom they received child benefit under the Income Tax Act,
- were within a specified income bracket, and
- acquired home ownership for the first time and used it for their own residential purposes.
Restrictions on the Acquisition of Residential Property
A key requirement was the so-called ‘first-time acquisition rule’ (§ 2 Baukindergeld Directive): Funding could only be applied for the first-time acquisition of residential property (house or apartment) in Germany. Anyone who already owned owner-occupied residential property in Germany was excluded from the grant.
Income Limits
The taxable annual household income could not exceed 90,000 euros for one child, plus 15,000 euros for each additional child (as of 2021). The assessment was based on the average taxable household income of the two calendar years prior to the application—usually documented by income tax assessments.
Age Limits and Residence Status
There must be an entitlement to child benefit for the child who lives in the applicant’s household. Furthermore, a permanent residence status in Germany was required. Nationals from non-EU countries required corresponding residence permits.
Property Characteristics
Only owner-occupied residential property was eligible for funding. Rental properties or holiday homes were explicitly excluded. The property had to be registered as the main residence within Germany. Condominiums, houses purchased new or second-hand were also funded according to the stated criteria.
Deadlines
An application could only be submitted within six months after moving into the acquired property. The decisive factor was the documented move-in date in the resident registration office.
Amount and Disbursement of the Baukindergeld
Calculation of the Grant
The Baukindergeld amounted to 1,200 euros per child annually for up to ten years. This meant the total possible funding per child could reach up to 12,000 euros. Payment was made annually by KfW after fulfilling the funding requirements.
Conditions for Disbursement
The first payment was made after the approval procedure was successfully completed, in which all proofs regarding children, ownership, main residence, and income limits were submitted and verified by KfW. Further payments were made annually upon proof of continued eligibility.
Eligible Measures and List of Supported Actions
Eligible Acquisition Activities
The Baukindergeld was tailored for the following measures:
- The purchase of newly built single- or two-family homes as well as condominiums
- The construction of homes for own use
The following were excluded:
- Acquisition of undeveloped land for later construction
- Second homes and holiday apartments
- Transfers by gift or inheritance without financial consideration
Procedures and Proof Requirements
Application and Overview of the Procedure
Applications could only be submitted digitally via the KfW grant portal. After applying, all required proofs (e.g., land register extract, registration certificate, income tax assessments, birth certificates/child benefit proofs) had to be submitted in digital form within the verification periods.
Verification and Clawback Rights
Within the scope of grant processing, KfW reserved extensive rights for verification and reclaiming of funds. In the case of incorrect statements or failure to meet the grant criteria, the grant sum could be reclaimed in whole or in part (§ 49 VwVfG analog).
Incorrect, incomplete, or intentionally false statements result in rejection or reclamation of the grants.
Tax Treatment of the Baukindergeld
According to § 3 No. 11 EStG, the Baukindergeld is a tax-free income. The grant therefore did not have to be declared as income in the tax return. The grant also did not have to be offset with other measures supporting residential property (such as Wohn-Riester or home savings subsidies).
End of the Funding Program
The original Baukindergeld program expired for new construction applications as of March 31, 2021. For existing properties as well as construction applications where the building permit or purchase contract was dated before this date and move-in occurred within deadlines, applications could still be submitted until December 31, 2023.
A resumption or renewal is currently not included in the federal funding catalog. Any future programs to promote families in acquiring home ownership will be announced separately.
Legal Classification in the Context of Housing Assistance
The Baukindergeld is closely linked to other federal and state government support programs in the fields of housing and family assistance. It is a socio-politically motivated measure within the context of Article 6 Basic Law (Protection of Marriage and Family) and Article 13 Basic Law (Inviolability of the Home), aiming to support sustainable formation of ownership and to relieve families with children. The regulation is embedded in the social state principle according to Article 20, Paragraph 1 of the Basic Law.
Relation to Other Federal Funding Programs
The Baukindergeld is to be distinguished from parallel and subsequent support schemes, such as the ‘Eigenheimzulage’ (expired in 2006) or housing guarantees and favorable loans. Accumulation is only possible within the scope provided by law and the specific program design.
References and Sources
- KfW: Guidelines and Information Sheets Baukindergeld, as of 2021
- Federal Ministry of the Interior, Building and Community: Information and FAQ Baukindergeld, 2021
- § 3 No. 11 Income Tax Act (EStG)
- § 49 Administrative Procedures Act (VwVfG)
- Notifications of the Federal Government in the Legislative Process on Housing Assistance, 2018-2021
- Art. 6, Art. 13, Art. 20 Para. 1 Basic Law
This article provides a comprehensive legal overview of the concept of Baukindergeld, examining the legal requirements, administrative procedures, and tax treatment, as well as its integration into the German housing assistance framework.
Frequently Asked Questions
Who is legally entitled to Baukindergeld?
Pursuant to § 2 of the Baukindergeld Directive (BKGG), individuals eligible for the Baukindergeld are natural persons who, at the time of application, are entitled to child benefit under the Income Tax Act (EStG) and move into owner-occupied residential property for the first time with at least one child who is entitled to child benefit and lives in the household. The decisive factor is that the child has not reached the age of 18 at the time of moving in and is registered as residing in the same household. The applicant is further required to use the property for personal residential purposes and to prove ownership as of the key date. The taxable household income of all adults named in the application is taken into account and may not exceed the specified income limit (generally €75,000 taxable income per year plus €15,000 per child) as an average of the two calendar years prior to application. Spouses and registered civil partners are jointly eligible if both are registered as owners in the land register.
What legal requirements apply to the use of the property?
The guidelines state that Baukindergeld is only granted for properties that are demonstrably and permanently used for personal residential purposes. The entitlement lapses if the property is rented out or partially rented out to third parties, with the sole exception of household members. It is also legally inadmissible to use the property for commercial purposes or as a holiday home. Proof of owner-occupation is provided at the latest with the certificate from the local registration office. If the property is sold or no longer owner-occupied within the 10-year funding period, the entitlement lapses and grants already paid out may be reclaimed.
What deadlines must be observed when applying?
Pursuant to the KfW funding guidelines, a legal deadline applied to the application: The application had to be submitted no later than six months after moving into the funded property, and the move-in had to be evidenced by an official registration certificate. For new buildings, the application could be submitted upon receipt of the building permit and completion; for existing properties, upon completion of the purchase contract and move-in. The deadlines are exclusionary deadlines; a delayed application will necessarily result in rejection—no discretion exists on the part of the approval office.
How is verification of income limits legally binding?
The legal basis provides that, for verification of the income limit, the taxable income as shown in the income tax assessment must be used. The determination of income relates to the two calendar years prior to the application. Appropriate tax assessments must therefore be submitted—or in the case of joint assessment, the assessments of both spouses/partners. Incomplete or contradictory information leads to a total or partial loss and reclaim of the Baukindergeld under § 6 BKGG. A subsequent increase in income in later years does not affect eligibility for funding, provided the income limit was met in the relevant period.
What are the legal consequences of incorrect information in the application?
Anyone who deliberately or negligently provides incorrect or incomplete information as part of the application process may be liable to prosecution under the relevant subsidy laws and § 263 StGB (fraud). In the case of false information, the approving authority is entitled to reclaim grants paid. In addition to interest, administrative penalties and, in the case of intent, criminal consequences (imprisonment or fines) may also apply. Applicants are obliged to report changes regarding the funding requirements, such as moving out or changes in income, without delay in order to avoid legal disadvantages and criminal sanctions.
Are there legal restrictions on eligible properties?
Baukindergeld can only be applied for residential properties (condominiums, single-family homes, etc.) that serve as a primary residence and are located in Germany. Second homes, holiday apartments, commercially used properties, or properties held in heritable building rights or usufruct are not eligible unless there is an actual transfer of ownership. The legal basis requires a complete and permanent transfer of ownership in the land register and submission of the notarized purchase contract or building permit at the time of application.
