Rent-free in retirement: what is it worth in euros?
Last updated: · under the rules from 1 January 2027 · Publisher: INTERNA · responsible: Marc A. Schnitzler, in mortgage financing since 2005
If you pay no rent in retirement, you need a smaller pension. With rent of €900 a month that is €10,800 a year, €216,000 over 20 years of retirement. With the home-ownership pension (Eigenheimrente), from 2027 the state adds money for every eligible person so that the loan is paid off by retirement: up to €540 a year and up to €300 per child. That is why it is called Eigenheimrente, meaning “home-ownership pension”: your pension is in your home.
What rent costs in retirement
| Rent per month | per year | over 20 years of retirement |
|---|---|---|
| €600 | €7,200 | €144,000 |
| €900 | €10,800 | €216,000 |
| €1,200 | €14,400 | €288,000 |
Calculated with rent staying the same. If the rent rises, the difference becomes bigger. Tenants and owners both pay for heating, water and property tax. Owners also put money aside for repairs.
How the state helps you pay off your home
You live rent-free when the loan is paid off by the time your pension starts. The Eigenheimrente helps in three ways:
- More equity when buying, and therefore a smaller loan. How much equity you need.
- Faster repayment of an existing loan with the balance including subsidies. How the subsidy for repayment works.
- An interest rate that is already fixed today, with the home savings loan, as soon as you have saved enough and the building society has checked your income. It must be paid off by your 68th birthday. How the home savings loan works.
Example: family with two children
A couple, both working, two children, each pays €150 a month into a subsidised contract. The state adds €1,680 a year. After ten years that is €16,800 from the state, together with their own money €52,800 that can go into the home. Calculated without interest and contract costs. The child subsidy is paid as long as child benefit (Kindergeld, the monthly state payment for children) is paid.
What is taxed in old age
The subsidised money you put into your home is recorded by the central subsidy office (Zulagenstelle) in your home subsidy account (Wohnförderkonto). You pay tax on this amount spread over the five years after the payouts from your contract start. You keep the subsidies. Once the home subsidy account has been fully taxed, the home is entirely yours: you may sell it or rent it out without any further tax arising from the home subsidy account. If you move out for good earlier, the remaining amount is taxed all at once, unless you buy a new home of your own within fixed deadlines. Your advisor shows you the deadlines.
How much subsidy does your household get? The subsidy calculator works out in one minute how much subsidy you can get. An advisor then checks with you whether everything fits your situation. This conversation is free of charge and in English.
Calculate your subsidyFrequently asked questions
Is living rent-free in retirement worth it?
If you pay no rent in retirement, you need a smaller pension: with €900 rent, €10,800 a year. In return, an owner pays for repairs themselves. Whether buying pays off for you depends on purchase price, interest rate and income.
How does the Eigenheimrente help you live rent-free in retirement?
From 2027 the state adds up to €540 a year for every eligible person and up to €300 per child. The money becomes equity when buying or pays off an existing loan so that it is paid off by retirement.
Do I pay tax on the Eigenheimrente in retirement?
Yes, on the amount of subsidised money you have put into your home, spread over the five years after your pension starts. You do not have to pay back the subsidies.
Read more
Sources
- Federal Ministry of Finance: questions and answers on the reform of private pensions (in German)
- Zentrale Zulagenstelle für Altersvermögen, the central subsidy office: how Wohn-Riester works (in German)
- Federal Law Gazette 2026 I No. 156: Altersvorsorgereformgesetz, the pension reform act (in German)
The money in the contract is meant for your retirement and your own home. If you have the subsidised savings paid out early, for example by cancelling the contract, you have to pay back the subsidies and tax benefits.
The examples explain the legal rules in simplified form. They do not replace tax or legal advice for your personal situation. Contract costs and interest are not included. This page was created with the help of artificial intelligence and translated from the German original. INTERNA is responsible for its content. More information