Withdrawing AVD Balance for Property Purchase
Published on · Managing Director & Partner, Alsterspree Verlag GmbH
This article was written by an author with the support of AI.
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Can I withdraw funds from the Altersvorsorgedepot?
Yes, starting with the launch on January 1, 2027, you can withdraw capital from the new Altersvorsorgedepot (the state-subsidised retirement investment account) for the purchase or construction of an owner-occupied residential property, provided the contract terms of your chosen provider include this option. Providers may offer the new products starting January 1, 2027, and the withdrawal option for owner-occupied housing is no longer a mandatory contractual component, but rather an optional feature at the provider's discretion. Legally termed the home ownership amount (Altersvorsorge-Eigenheimbetrag), this withdrawal can be made without penalty to state subsidies starting from a minimum amount of 3,000 euros.[1]
With the Pension Reform Act (Altersvorsorgereformgesetz - AVRG), the previous housing subsidy framework (Wohn-Riester) is transitioned into the modernized subsidy system. A central difference compared to previous legislation lies in contractual freedom: whereas the withdrawal option for residential property was previously required in every subsidized contract, providers may offer this as an optional feature in the future.
- Minimum amount: For a penalty-free withdrawal regarding subsidies, at least 3,000 euros must be utilized for qualifying residential purposes. If only part of the balance is withdrawn, at least 3,000 euros of subsidised capital must also remain in the contract.
- Maximum limit: Up to 100 percent of the subsidized capital can be used for debt clearance or acquisition.
- Contractual clause: The withdrawal option is no longer a mandatory component of every standard product, making it essential to verify this clause prior to signing a contract.
If you are planning to purchase residential property, you should already make sure when selecting a provider that withdrawals for Wohn-Riester and the Altersvorsorgedepot are anchored in the contract terms.
Prerequisites and permitted uses
The withdrawal of the home ownership retirement amount is subject to clear legal requirements. The mandatory prerequisite is the direct owner-occupancy of the property as a primary residence or center of life. Renting it out to third parties or using it purely as an investment property excludes tax preferential treatment.
- Acquisition or construction: Direct use of depot capital to finance the acquisition or construction costs of an owner-occupied apartment or house.
- Loan repayment: Full or partial debt repayment of a mortgage loan taken out for the acquisition or construction of the owner-occupied property.
- Cooperative shares: Acquisition of mandatory membership shares in a registered housing cooperative for owner-occupancy.
- Renovation and energy retrofitting: Financing barrier-reduction conversions or energy-efficient refurbishment measures, confirmed by a certified construction contractor or expert.
If owner-occupancy is permanently discontinued before the regular payout phase begins, the withdrawn capital must generally be promptly reinvested into another subsidized retirement contract to prevent a tax-harmful dissolution.
Impact on your final capital and the Wohnförderkonto
Withdrawing investment capital reduces the remaining assets in the depot and thus dampens the long-term compound interest effect of the securities investment. At the same time, the withdrawn capital is not tax-exempt: it is recorded arithmetically in a so-called Wohnförderkonto at the central allowance authority.
The Wohnförderkonto serves as a notional tracking account for deferred taxation. Starting at the beginning of the payout phase, the withdrawn amount is taxed at the individual income tax rate applicable at that time. Under the Altersvorsorgereformgesetz this taxation is no longer spread over the customary 20 years, but over just five years from the start of the payout phase.
| Comparison parameter | Scenario A: Withdrawal for home ownership | Scenario B: Retained in the Altersvorsorgedepot |
|---|---|---|
| Withdrawn equity | Partial or complete withdrawal of subsidized capital | No withdrawal |
| Remaining depot balance after 20 years | Reduced final value due to capital withdrawal | Full capital growth through compound interest effect |
| Tracking in the Wohnförderkonto | Withdrawn amount is recorded as a notional tax value | No Wohnförderkonto required |
| Taxation in retirement | Deferred taxation of the Wohnförderkonto | Regular deferred taxation of payouts |
The information in the table serves to illustrate the system. No investment advice pursuant to § 1 Abs. 1a Nr. 1a KWG. For a complete overview of the regular payout modalities, learn more about how to withdraw from the Altersvorsorgedepot.
Weighing options: Withdraw equity or finance more through loans?
For builders and property buyers, the strategic question arises whether existing depot balances should be withdrawn to prove equity, or whether higher bank borrowing is economically more advantageous. This decision requires a direct comparison between the bank loan interest rate and the expected return of the ETF portfolio.
- Loan interest versus expected return: If the borrowing rate for the mortgage loan is lower than the long-term expected return of a diversified equity portfolio, keeping the money in the depot can be mathematically more profitable.
- Terms advantage through equity: A higher equity commitment improves the loan-to-value ratio with the bank, which can lower the interest rate for the entire loan.
- Liquidity and flexibility: Assets remaining in the depot continue to serve as a flexible retirement planning component, whereas a withdrawal is locked into the Wohnförderkonto.
Savers with an investment horizon of several decades often keep their money invested in the depot to benefit from market opportunities. The fundamental decision regarding property for retirement provision should always be considered within the context of the overall asset structure.
Outlook for 2027: Which details remain to be resolved
The legislative process is complete: Following approval by the Bundestag, the Bundesrat approved the reform on May 8, 2026, confirming the official start date of January 1, 2027. While the statutory framework for the retirement savings home ownership deduction (Altersvorsorge-Eigenheimbetrag) is defined, the operational product offerings across the financial sector are currently taking shape.
- Product range among neobrokers: Starting in late 2026, it will become evident which depot providers and brokers technically integrate the residential withdrawal option into their user interfaces.
- Administrative guidelines: Detailed application and verification processes for evidence regarding energy-efficient renovations or barrier-free modifications will be specified through subsequent regulatory directives.
- Standard depot: A statutory fee cap of 1.0 percent applies to the certified standard product, whereas individual add-on options such as residential retirement provisions (Eigenheimrente) are configured on a contract-specific basis.
Savers currently do not need to take any rushed action. Until certified products are launched at the turn of 2027, we recommend monitoring market developments calmly.
Your next steps: Calculation and neutral advisory
Whether withdrawing capital from the retirement savings depot saves costs compared to taking out a larger mortgage over twenty years depends on your individual mortgage interest rates, subsidy balance, and remaining investment horizon. This decision can only be accurately calculated based on your personal figures.
- Analyze subsidy scenarios: Use the Altersvorsorgedepot subsidy calculator to work through the effects of contributions and state allowances on your projected depot balance up to the start of retirement.
- Optimize financing structure: For aligning construction financing, fixed-rate interest periods, and depot strategy, our independent advisory matching service connects you with qualified, neutral experts.
With solid calculations, you establish a reliable foundation for your property purchase. All sample calculations and model comparisons serve purely illustrative purposes and do not constitute investment advice within the meaning of § 1 Abs. 1a Nr. 1a KWG.
Häufig gestellte Fragen
- Can I withdraw the entire balance to purchase a home?
- Yes, you can withdraw up to 100 percent of your subsidized retirement assets to purchase or pay down debt on an owner-occupied residential property. The prerequisite is that your provider's contract terms permit this withdrawal and that the amount is at least 3,000 euros.
- What happens to my state subsidies in that case?
- Your accumulated subsidies remain intact upon residential use and do not need to be repaid. However, the withdrawn amount including subsidies is tracked in a notional housing subsidy account (Wohnförderkonto). This balance is subject to deferred taxation during retirement, as the state balances the tax benefit over the payout phase.
- Is withdrawing from the retirement savings depot better than taking out a larger loan?
- This depends on your individual opportunity costs. If the long-term expected return on your retirement savings depot significantly exceeds your mortgage interest rate, it is often more advantageous to leave the capital invested and take out higher property financing. A precise actuarial review of interest rates and investment horizon is essential here.
- Does the withdrawal option also apply to rented-out properties?
- No, the retirement savings home ownership deduction may only be used for owner-occupied residential property. If you rent out the property, owner-occupancy ceases, triggering a harmful usage determination (schädliche Verwendung). In this case, the housing subsidy account is dissolved immediately and the full amount becomes taxable.
- Can I also use the depot balance for renovations?
- Yes, starting in 2027, withdrawals are also permitted for financing barrier-reducing conversions or energy-efficient renovation measures. A certified construction specialist contractor or an expert surveyor must verify and confirm the compliant use of funds.
Sources
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