Homeowners’ association at a glance

A condominium owners’ association (WEG) is an association of owners of apartments in a common building.

The community of owners can be described like this:

Community of all owners of a property.

As the owner of your apartment, you are a member of the WEG and have joint responsibility with the other owners for managing the common property, e.g. the staircase, the roof, the facade and the common utilities.

You also decide jointly on maintenance and repairs and on the financing of these measures. It is important to note that every decision in the WEG is made jointly and that you, as a member of the WEG, are also obliged to participate in the decisions and bear the costs.

The WEG at a glance:

• Each owner can represent his right to vote at the meeting of owners
• Each owner has a certain co-ownership share in the common property
• Each member of a WEG must bear costs for the common property
• Each owner is responsible for his or her own special property
• Each owner has to fulfill certain rights and obligations
• Each COA must have certain documents that set out rules and boundaries

The legal basis for a WEG is provided by the Condominium Act. It provides the owners with guidelines and regulations for the proper administration of the WEG. Let’s take a closer look at the Condominium Act (WEG for short).

Condominium Act (WEG)

The German Condominium Act (Wohnungseigentumsgesetz ) is of great importance to all condominium owners in Germany, as it lays down the legal foundations for the organization and management of condominium associations.

The WEG regulates, among other things, the distribution of rights and obligations between the individual owners and the community as well as the management and maintenance of the common property.

There are clear specifications for holding owners’ meetings, passing resolutions and managing funds. The establishment and duties of the management advisory board and the administrator are also regulated in the WEG.

The WEG regulates:

• The distribution of rights and obligations
• The management and maintenance of the common property
• The conduct of the meeting of owners
• The decision making
• The management of funds

The owners’ meeting is guided by the laws of the WEG:

In a WEG, every member is involved and must fulfill certain rights and obligations. In the next section, we will explain what you have to do as an owner.

Rights and obligations of the owners

As an owner in a homeowners’ association, you have certain rights and obligations. You have the right to use and manage your apartment, but you must also consider the common interests. This means that you must abide by jointly agreed rules and regulations that apply to the building and its residents.

Furthermore, as an owner in the homeowners’ association, you are obligated to participate in the management and maintenance of the common areas and facilities.

Rights of use to one’s own home

As the owner of your apartment in a homeowners’ association, you have the right to use and manage your apartment. It is up to you whether you live in the apartment yourself or rent it out. For example, you can renovate your apartment or buy new furniture, as long as you do not interfere with other owners.

The own apartment may be managed and designed by the owner, as long as the common property is not affected.

However, you must also consider the interests of the other owners and the community when using your apartment. For example, you may not make any structural changes to your apartment that could affect the appearance of the building or cause problems with other apartments.

Rights of use to common property

As an owner in a homeowners’ association, you are responsible for managing and maintaining the common areas and facilities together with the other owners. This includes, for example, the staircase, the elevator, the roof, the facade, the outdoor facilities and, if necessary, the heating system.

These rights and obligations accrue to owners on the common property:

• Management and maintenance of common areas

How these costs are financed and distributed is explained in the next section.

Financing common costs

As an owner in a homeowners’ association, you are obliged to contribute to the common costs of the association. This includes, for example, the costs for the management and maintenance of the common areas and facilities, but also the costs for the operation of the elevator, the waste disposal or the water supply.

The costs are usually calculated according to the ratio of your share in the common property. For this purpose, the declaration of division specifies which share you have in the homeowners’ association. This distribution of costs is also called the cost distribution key.

In addition to the running costs, larger maintenance or renovation measures may also be required, which are associated with a higher financial outlay. For this purpose, a reserve is usually formed, which is regularly replenished by the owners with a certain amount. This reserve is used to finance larger repairs and maintenance measures without the need for additional funds to be raised by the owners.

These costs are incurred in a WEG:

• Costs for the management and maintenance of common areas
• Costs for the operation of the elevator, waste disposal or water supply
• Maintenance reserves

The costs incurred are discussed at the owners’ meeting:

Organization of a homeowners association

The organization of a homeowners’ association is an important part of living together. There are various committees and bodies that are responsible for managing the community.

The most important body is the owners’ meeting. Here, all owners meet once a year to make important decisions and to discuss the concerns of the community.

Another important body is the management advisory board. This is elected by the owners’ meeting and supports the administrator in the management of the community.

The administrator is the executive body of the condominium owners’ association. He or she takes care of the administration of the community and ensures that all necessary work is carried out.

The most important instances of the WEG at a glance:

• WEG administrator
• Management Advisory Board
• Owners’ meeting

Now let’s take a closer look at the individual instances.

Administrator of the WEG

The administrator is the executive body of a condominium owners’ association and is responsible for the administration of the community. This includes, among other things, the organization and monitoring of maintenance measures, the preparation of accounts and communication with the owners and the various committees of the community.

The duties of the administrator include:

• Organization and monitoring of maintenance measures
• Preparation of accounts
• Communication with the owners and the various committees

The choice of a suitable administrator is therefore of great importance. As a rule, a professional management company is commissioned that has the necessary knowledge and experience. However, voluntary management by an owner is also possible.

Management Advisory Board

In addition to the administrator, there is also the management advisory board. The management advisory board consists of at least three owners. This body is elected by the owners’ meeting and has the task of supporting and monitoring the manager. However, the management advisory board has no decision-making authority and can only make recommendations.

The Management Advisory Board at a glance:

• Composed of at least three owners
• Elected by the owners’ meeting
• Supports and controls the administrator

Owners’ meeting

The owners’ meeting is the highest decision-making body and meets at least once a year. Its task is to discuss and decide on important matters concerning the community.

The owners’ meeting is convened by the administrator or by an owner. Certain deadlines and formal requirements must be observed. As a rule, invitations must be issued in writing at least two weeks before the meeting. The invitation must state the items on the agenda as well as the place, date and time of the meeting.

The typical topics of an owners’ meeting include the adoption of the business plan, the election of the manager, the vote on maintenance measures or the definition of house rules. The owners’ meeting also decides on the amount of the monthly house fees.

The community of owners at a glance:

• Meets at least once a year
• Advises on important matters of the community
• Convening takes place through the administrator

Apartment: check your property

First of all, your own home should be checked. If you do not have the necessary know-how yourself, you should definitely hire a professional.

What should you check?

• Windows – condition, year of manufacture, seal
• Exterior walls – measure moisture
• Walls and ceilings
• Floors (baseboards)
• Electrical subdistribution – fuse box
• Bathroom – humidity, water pressure, etc.
• Possibly built-in wardrobes

Common property in apartment building: checklist

If you have bought your first apartment in an apartment building, you are always part of a community of owners. This means for you that you also contribute your part to the common living together. This is no longer just about your own apartment, but about the entire building in which your property is located.

What is included in the inspection of the common property?

• Facade and roof, attic
• Basement – moisture
• Electric meter cabinet, main distribution
• Heating system
• Deficiencies – knowledge by residents
• Repair and modernization measures

The next step: evaluation by year of manufacture

A real estate appraisal is especially important when buying your first apartment. This includes the valuation by year of construction of your house or the building in which your condo is located. So what is the age limit of a building? You can find the answer in this article on valuation by year of construction.

Saving or investing? – What do I do with my money?

You have two options for building up wealth. Either invest money or invest money. If you rely on real estate as a capital investment, your financing will “reduce” itself over the years, and this way also offers protection against inflation.

Here we have summarized the decisive advantages of real estate as an investment:

• Real estate is stable in value with inflation
• Inflation “reduces” your loan

Source: Asset building/ Real estate experience.com

Money investment and value investment in comparison

Let’s look here at the investment of money in the bank and the investment of value as real estate in comparison, with its impact on the loan.

1. Investment: Savings book, Riester pension & Co.
2. Investment: Real estate as a form of investment
3. Loans: steady reduction due to inflation

Investment: Savings book, Riester pension & Co.

The typical forms of investment are still present. Not much has changed in society’s savings behavior in recent years. Many blindly invest their money in the bank in the form of building society savings contracts, Riester pensions or endowment life insurance policies. Often, people save and, due to interest rates and inflation, receive almost less money than they paid in.

• Interest and price increase are credited to you
• Loss of value due to inflation – amount of money remains the same or even becomes less

So, simply put, 10,000 euros will always remain 10,000, as described above.

Real estate vs. savings book: Who wins?

Even in times of crisis, real estate is considered a safe investment. It is stable in value in the event of inflation and even your loan can be positively affected by a depreciation of money, so you can sell your property later for twice its value.

• 10,000 Euro savings account after 30 years: 10,000
• 10,000 Euro Property after 30 years: 20,000

Reduce loans: Inflation as your best friend

Due to the devaluation of money, the value of your property is constantly increasing. So what happens to your loan?

A quick look at a loan taken out:

• 10.000 Euro credit today, are also later still 10.000 Euro

If you have already rented out your property, all the better! Due to inflation you get steadily more rent, and continue to pay off your loan through your passive income.

• 2020 = 350 Euro rent / repayment 300 Euro
• 2035 = 460 Euro rent / repayment 300 Euro

Don’t think so? Look it up yourself: Inflation Table

Source: Asset building/ Real estate experience.com

Conclusion: Real estate as a money pit

In the long run, real estate is a real goldmine. In addition to the return earned through rent payment and profit on sale through appreciation, the amount of income increases thanks to inflation. So your repayment of the loan becomes easier and easier.

Here again our most important points summarized:

• Real estate is stable in value with inflation
• Property can be sold later for double the value
• Investment: loss of value due to inflation – amount of money remains the same or even becomes less

The next step: real estate for retirement provision

In our last article on wealth accumulation, you already learned what inflation means. Here we will show you the effects of inflation on your future pension. Here again the question arises whether real estate is not the better way to provide for your old age than an investment in the bank or the statutory pension plan. In this article, we compare your three alternatives to show you the best way to stop worrying about your assets in old age.

Taxes & real estate: from basics to savings tips

Whenever money is involved, taxes inevitably come into play at some point. Of course, this is also the case in the real estate business: countless taxes such as sales tax, trade tax, acquisition tax, property tax or inheritance tax are incurred. It is not easy to keep an overview. Our list of book recommendations should help you answer your open questions and provide you with the necessary knowledge, with which you will soon be a professional in the field of real estate taxes.

Before we come to the book recommendations for real estate taxes, here are 3 tips on the subject: Learn for free on Lukinski, from the tax 1×1, to special real estate taxes such as land transfer tax, property tax & Co. learn for free, as well as video recommendations and for those who want to become a real estate investor, still a look at the topic of tax coaching. Because the more money you earn by renting out houses and condominiums, the more taxes you pay. The more knowledge you build up about renting and taxes, the more equity you have for future investments as a landlord and real estate investor.

Tax 1×1 for real estate (free of charge, external)

If you are looking for tips online, we can also recommend Lukinski.de. Here you will find everything from getting started in real estate to real estate as an investment through renting to saving taxes with real estate (external). All free of charge.

Tip! Overview Taxes XXL

Taxes are often a vexing topic, especially in Germany. Wage tax, value added tax, real estate transfer tax and much more: it is not easy to keep track of everything. But if you’re not interested in employing a tax consultant, who can be quite expensive, you need to get to grips with the subject of taxes. We want to help you with that! Here you will find an overview of guides as well as book and video tips on the subject of taxes. Whether we introduce you to individual types of German taxes or you watch a video on the subject of tax returns, all your questions about German taxes will be answered here.

• Book & Video Tips Overview: Taxes

Tax optimization: Experiences from Tax Coaching

If you write about real estate, you have to educate yourself. More concretely, when it is no longer just about personal use, but also about renting. Because, the biggest item on the expense side is taxes. The more you earn, the more taxes you have to pay – the problem is clearly defined, what to do? Learn from experience, from those who have made it. Many say that the Next Level Tax Coaching is the best in Germany. Reason enough to take part yourself. You want to become a real estate investor yourself?

Read more about tax coaching here:

• Tax optimization: Coaching

Find a tax consultant: near you

Are you still looking for the right tax advisor in your area? Then take a look at our lists: We have compiled the best-rated tax consultants for you for almost every city in Germany, where you should always receive good advice. You can find more information about tax advisors in your area here.

Fundamentals of the real estate industry

Rating: 4.4 / 5.0 (33 ratings)

This renowned basic textbook provides a clear introduction to the entire life cycle of real estate. It provides students and teachers with the economic, legal and tax knowledge necessary for this rapidly expanding field. It is also ideally suited as a reference work for lecturers as well as for specialists and managers in real estate companies.

• Extensive changes in building law
• Construction Contract Reform Act
• Amendment of the liability for defects under commercial law
• Regulations from the Act on the Modernisation of the Law on Environmental Impact Assessment
• Concept of orientation on the life cycle of the property
• Marketing, financing, portfolio management and project development
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Tax guide for real estate investors

Rating: 4.3 / 5.0 (233 ratings)

Alexander Goldwein’s trademark is to explain complex topics simply. This gives even readers without prior knowledge the chance to understand the interrelationships and to use this knowledge for their own benefit. The book contains numerous practical examples and up-to-date references to case law and letters from the Federal Ministry of Finance. It is suitable for both beginners and advanced readers.

• Maximum recognition of income-related expenses
• Realization of tax-free capital gains
• Tax advantages for listed properties
• Holiday real estate at home and abroad as an investment property
• Inheritance and gift tax (tax-optimised transfer to spouse & children)
• Bonus material: Excel tool for calculating return, financing costs and cash flow
• The ultimate tax guide for private investments in residential real estate
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Never pay taxes again as a real estate investor

Rating: 3.7 / 5.0 (15 ratings)

How not to pay taxes for your good real estate portfolio, this book explains to you with real practical examples:

• Theory explained
• Refurbishment and maintenance of real estate
• Credit financing for real estate
• The combination of financing and refurbishment
• Strategic planning of reorganizations for tax optimization
• 15% rule for acquisition-related production costs
• Practical example 1 – The first apartment tax-free
• Practical example 2 – The existing portfolio tax-free
• Practical example 3 – Re-borrowing to save tax
• Practical example 4 – New MFH with a broken flat
• Final thoughts
• Includes real-life examples and real numbers from my properties and my tax return.
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Giving away & bequeathing real estate in a tax-optimised manner

Rating: 4.6 / 5.0 (63 ratings)

The basics and structuring options are presented systematically and understandably in this book. The reading requires no prior knowledge and is also suitable for legal laypersons:

• Presentation of the legal succession with the consequences for the inheritance tax burden
• Optimal drafting of a will for the transfer of real estate to children and grandchildren
• Gifts of real estate during lifetime as a means of reducing the tax burden
• Protection of the donor of real estate through usufruct, right in rem and life annuity
• Succession by will regulate & save taxes with allowances & gifts of houses & condominiums
• Annex with sample texts for the implementation of the strategies
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Tax lexicon of the basics

Rating: 4.0 / 5.0 (124 ratings)

In this tax lexicon of basics, difficult technical knowledge is simply brought to the point by Alex Fischer. With the help of good explanations and practical examples, it gives you a (relatively) easy introduction to the complex world of taxes:

• You want to finally know and understand how the tax system works in real life?
• When searching for helpful information you come across thousands of technical terms that confuse you?
• If you look up a technical term (online or encyclopedia) are in the definition again umpteen technical terms that you do not understand?
• Even if you understand the definition, you don’t know what the point is for you?
• Things are described with no “hands on” example?
• For beginners and advanced learners who want to know more about the tax system
• For people who finally want to have a clear view when it comes to taxes
• For people who have the goal to optimize their personal finances and tax arrangements
• Bonus: Workbook
• Most important technical terms simply explained
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Save taxes for real estate owners

Rating: 4.1 / 5.0 (8 ratings)

This book covers these topics and much more:

• Construction and purchase of real estate, tax incentives for home ownership
• Management of owner-occupied and rented real estate, taxation of rentals
• Sales and taxes on the disposal of real estate
• Inheritance and inheritance tax
• With detailed index
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Tax guide for landlords

Rating: 4.2 / 5.0 (29 ratings)

How you can save taxes as a real estate investor with the right tax strategy – Would you like a good overview of the tax regulations and structuring options available to you in the context of a private real estate investment?
This guide provides you with the necessary knowledge – comprehensibly prepared and immediately applicable in practice:

• Complete tax strategy from A to Z
• Complete tax guide for long-term real estate investments
• Income Tax & Value Added Tax
• Determination of personal income tax rate
• “small 1×1 of the expenditures with renting and leasing”
• Numerous examples and suggestions for implementation
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The tax of the real estate – made easy

Rating: 4.2 / 5.0 (10 ratings)

Real Estate and Taxes? In this book, an experienced tax advisor solves the tax issues from owning a home to managing large properties:

• Acquisition, construction, modernisation
• Income, renting, sale, trade
• Value added tax, trade tax, acquisition tax, property tax, inheritance tax
• Textbook for house and land ownership
• Indispensable for all learners in the real estate industry, also a handbook for interested and committed people
• Plus: 25 overviews and 45 guiding principles
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Tax knowledge 2 go: Crash course

Rating: 4.4 / 5.0 (111 ratings)

In this guide for small businesses and freelancers, you’ll learn how to keep your money with you as a self-employed person and not give it away to taxes:

• Income statement
• Value added tax (including small business regulation)
• Trade tax
• Income tax
• Deduct business expenses from tax
• Understandable, practical and compact
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Master Course Real Estate Investments

Rating: 3.7 / 5.0 (10 reviews)

Rent out real estate successfuly and save taxes: In this part of the book series, you will receive an understandable introduction to the tax law that is of practical relevance to landlords. In addition, you will receive a practice-oriented introduction to the basics of tenancy law, including the possibilities for rent increases.

In addition, the book series includes the following other parts:

• Strategy to get rich with real estate
• Search, check and buy real estate professionally
• Financing and calculating real estate correctly
• Concluding real estate purchase and construction contracts with legal certainty
• Buy at Amazon

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