A right of residence and a usufruct are often mentioned in the same breath when parents transfer their house to their children. Both ensure that the previous owners can continue living in the house. Legally and economically, however, there are clear differences, and these are reflected in the tax value.
The right of residence: living there, but not letting
The registered right of residence allows the beneficiary to use a building or part of it as a home, to the exclusion of the owner. They may take in family members and carers, but letting to third parties is only possible with express permission. If the beneficiary moves into a care home, the flat often stays empty because it cannot simply be let.
The usufruct: comprehensive use
The usufruct goes further. The beneficiary may live in the property, let it and keep the income. Economically they are placed almost like an owner, but cannot sell or mortgage the property. By law, they bear the ordinary upkeep and the ongoing public charges such as property tax. Extraordinary repairs, such as a new roof, are generally the owner's responsibility unless the contract says otherwise.
Same formula, different annual value
For tax purposes, both rights are valued in the same way: annual value times multiplier under § 14 BewG, capped under § 16 BewG at the property value divided by 18.6. The difference lies solely in the annual value.
1. For a right of residence, it is the local net rent for the rooms the beneficiary may occupy.
2. For a usufruct, it is the entire net yield: the rent saved if owner-occupied, or the rental income minus the costs borne by the beneficiary if let.
Example: granny flat or the whole house
A 78-year-old mother transfers her house with a property tax value of €480,000 to her son. Option A: she keeps a right of residence in the granny flat, local rent €550 per month. Option B: she keeps a usufruct over the whole house, annual value €18,000.
1. Multiplier, woman aged 78, from 1 Jan 2026: 8.271
2. Option A: €6,600 × 8.271 = €54,589 capital value
3. Option B: €18,000 × 8.271 = €148,878 capital value
In option A, the gift is worth €425,411. After the €400,000 allowance, €25,400 is taxable and the tax is €1,778. In option B, the gift is worth €331,122 and stays tax-free. Without any right, €80,000 would be taxable, €7,750 after hardship relief.
Which right suits you?
The choice should not be driven by tax alone. Key questions are:
1. Do you want to earn rental income later or be able to let the flat if you move? Then a usufruct has much to recommend it.
2. Should the recipient use or let the rest of the house? Then a right of residence limited to certain rooms is often a better fit.
3. Who bears which costs? This can be agreed by contract for both rights and affects the annual value.
4. What happens if care is needed? A right of residence that can no longer be used is of little value to the beneficiary.
Do not forget income tax
Besides gift tax, income tax plays a role. For a let property under a usufruct, the beneficiary pays tax on the rental income. As a rule, the owner cannot claim depreciation during the usufruct. These questions depend heavily on the individual case and belong in a tax consultation.
Conclusion
The right of residence is the leaner right, usually with a smaller capital value; the usufruct is the broader one with a larger deduction. Calculate both options in the Usufruct Value Calculator by adjusting the monthly benefit. You will see how strongly the choice affects gift tax.