Child benefit for building does not exclude tax bonus

Anyone who buys an apartment or a house and would like to have some of the work renovated can take advantage of the tax bonus for tradesmen's services despite receiving child benefit for building a home.

This article is part of the special topic Tax bonus for tradesmen's invoices: What you should know

Double funding isn't actually allowed under tax law. Therefore, the tax reduction for tradesmen's services is canceled if the construction project is already receiving funding through another program. However, this does not apply to child benefit for building a house.

This is the child benefit for building a home

Anyone who builds or buys a home and has children under 18 can Child benefit for building a home from KfW Bank apply. Families receive EUR 12.000 for each child who has not yet reached the age of 18 on the day of application (1.200 euros per child for ten years).

Child benefit for building a home is only available if the annual taxable household income for families with one child does not exceed €90.000. An additional €15.000 is permitted for each additional child.

You must apply for child benefit for building a home no later than six months after moving in.

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Owner-occupied housing

Only the first-time purchase or new construction of owner-occupied residential property in Germany. If the household already owns a home, the subsidy is excluded. 

Also not eligible are:

• Holiday or weekend homes and holiday apartments
• the transfer of residential property by way of (anticipated) inheritance, testamentary disposition or donation,
• the acquisition or transfer of ownership between spouses, life partners or partners in any other long-term partnership,
• the acquisition or transfer of ownership between relatives of a household member in the direct line (for example: children, parents, grandparents, great-grandparents),
• the acquisition of residential property that was previously owned by a household member.

Tax bonus for household-related tradesmen's services

For those who buy an apartment or a house and usually want to modernize or remodel one or the other, there is a good news: For the work shown in the invoices, you can claim the tax bonus for household-related tradesmen's services (20 percent per year up to 6.000 euros).

The Ministry of Finance of Schleswig-Holstein clarified in a decree dated 18 June 2019: The KfW child benefit for building does not exclude the tax bonus.

Background and requirements

Basically there are Tax reduction for craftsmen's services not for measures that are publicly subsidized through low-interest loans or tax-free grants. However, the situation is different with the child home building allowance, which supports the initial purchase of home ownership or the acquisition of new housing, but the money is paid out over ten years.

The tax reduction for craftsmen’s services, however, does not apply to new construction or acquisition measures, but to the Renovation or modernization in an existing householdt. The regulations therefore have different objectives and can therefore be used in parallel, explains the Taxpayers' Association of Baden-Württemberg. 

Anyone who has moved into their new home and receives child benefit for building a home can still deduct the necessary conversion, renovation or modernization measures from their income tax as a tradesman's service, reports the Taxpayers' Association.

Prerequisite: is that the household already exists, the family has received an invoice and the payment is processed via a bank account.