Right of residence and usufruct.

As at: June 2026

The answer first. Both rights allow you to pass on ownership of the house and still live in it or keep the income. The right of residence (section 1093 of the Civil Code, BGB) secures your own living there; the usufruct (section 1030 BGB) additionally permits letting the property and keeping the rent. Both are entered in the land register and thus hold good against every later owner. And both are first of all ways to stay: putting things in order does not mean moving out.

The right of residence is the right, entered in the land register, to live in a house or flat to the exclusion of the owner. It is a personal right: it cannot be sold, cannot be inherited and as a rule cannot be made over to third parties — though you may of course take in family, household help or carers. What a pure right of residence does not permit is letting; whoever wants that needs the usufruct or an express agreement with the owner. The right of residence expires on the death of the entitled person — but not automatically on moving out. If the entitled person moves into a care home, for instance, the right continues to exist; it simply can no longer be used. The deed can provide for this case in advance, for example with a redemption in money.

The usufruct is the more comprehensive right: the entitled person may live in the property herself or let it and keep the income — she draws the “fruits”, as the law puts it. That makes the usufruct the more flexible arrangement: if you live there yourself at first and move out later, the rental income can continue to carry your provision, for instance help finance a care place. In return, the usufructuary as a rule bears the ordinary upkeep of the house and the running charges. The usufruct, too, can be neither inherited nor transferred; its exercise, however, can be left to third parties.

Both rights come into being through notarial creation and entry in the land register, usually in one step with the transfer deed. In the land register, rank matters: a right secured in first rank continues to exist even if the house is later sold or compulsorily auctioned. Both rights expire on the death of the entitled person; during her lifetime they can only be deleted with her consent — against compensation, where that has been agreed.

For tax and balancing purposes the right is valued. Its value follows from the annual value of the living or the income, multiplied by a factor based on statistical life expectancy. The younger the entitled person, the more valuable the right — and the lower the taxable value of the gift or the appropriate purchase price. That is why a reserved usufruct often reduces the gift-tax burden considerably. The calculation in the individual case belongs to a tax adviser.

Whoever looks for “staying put while releasing money from the house” will come across partial-sale offers: a provider buys a share of the house, often between ten and fifty per cent; you stay on and pay a monthly usage fee on the share sold. This mechanism deserves a calm, complete look. In many contracts the usage fee is adjustable and adds up considerably over the years. Maintenance usually remains with the seller alone — including for the share sold. On a later full sale, handling fees are often charged, and some contracts guarantee the provider a minimum return on its share, regardless of the actual market price. The financial supervisory authority BaFin classes the model as speculative; the consumer advice centres criticise the cost structure as hard to see through and show that a bank loan or an orderly full sale is frequently cheaper. That does not mean a partial sale can never fit. It means: calculate fully first, sign afterwards — and obtain independent advice beforehand.

With an annuity sale you sell the house in full and receive in return a lifelong right of residence and recurring payments — for life or over a fixed term. The market for this in Germany is small; the terms depend heavily on age, the value of the house and statistical life expectancy. Here too: an offer can only be examined seriously in comparison — with keeping the house, letting it, and an orderly sale at a time of your own choosing.

The right of residence and the usufruct are often thought of as companions to a transfer. But they are first of all one thing: ways to stay — and still put things in order. Whoever reserves such a right can hand over without giving up their home. And whoever transfers nothing at all has put things in order just as well, provided provision and estate are clearly arranged. Staying is not a postponement but a decision of equal worth.

Back to the overview: Right-sizing your home · on to Transfer during one’s lifetime.

Take your bearings Arrange a callback

This article provides orientation and does not replace legal or tax advice. The law is clarified by a lawyer or the notary’s office; taxes by a tax adviser. We describe patterns, not providers — and recommend an independent review before any partial-sale or annuity contract, for instance at a consumer advice centre.