Yes, the Home Ownership Pension Act (EigRentG) of 29.07.2008, Federal Law Gazette I p. 1509, introduced the so-called "Wohn-Riester". As a rule, the EigRentG includes owner-occupied residential property in the promotion of private pension provision from the 2008 assessment period. From January 1, 2014, the Retirement Provision Improvement Act (AltvVerbG) of 24.06.2013, Federal Law Gazette I p. 1667, applies to the promotion of home ownership.
With "Wohn-Riester", the state promotes the construction, purchase and barrier-reducing conversion of your own home. Funding is also provided for the repayment of a loan that you have taken out to purchase or build your own home. To qualify, the home must be your main residence, be occupied by you and be located within the EU or the EEA (Iceland, Liechtenstein and Norway). You must also be entitled to an allowance (e.g. compulsorily insured in the statutory pension insurance scheme, civil servant). If you are entitled to an allowance, there are two options for funding.
The first option is to withdraw capital from an existing pension contract. You can either withdraw all or - under certain conditions - part of the money saved in the Riester contract. If you use this money, for example, to build a house or repay a loan taken out to buy a home, the withdrawal does not constitute a harmful use. You therefore do not have to repay the allowances and tax benefits you have received.
The second option relates to old-age provision contracts with a loan component. You can use the subsidy for a loan that you have taken out, for example, to build a house (or another subsidized measure). The payments made to repay the loan are then regarded as pension contributions and subsidized with allowances. The allowances granted are used to repay the loan. You are also entitled to a special expense deduction for the repayments, provided this is more favorable for you than the entitlement to the allowances. If you conclude such a contract in combination with a home loan and savings contract, both the deposits during the savings phase and the repayments during the loan phase are subsidized with allowances.
like the classic Riester contract, "Wohn-Riester" is taxed retrospectively. Subsequent taxation actually means that the contributions in the payment phase are subsidized for tax purposes (via allowances or special expense deductions), but the pension you receive must be taxed at your personal tax rate. With "Wohn-Riester", however, no pension is paid out that could be taxed. Instead, the tax is levied on the basis of the so-called "Wohn-Riester account", on which the Central Allowance Office for Retirement Assets (ZfA) records the preferential withdrawals, repayments and allowances. Taxation takes place in accordance with § 22 No. 5 of the German Income Tax Act (EStG) and begins with the payout phase (usually on reaching the age of 67). You also have two options here: You can spread the amount in the housing promotion account evenly over the years between the start of the payout phase and the year in which you reach the age of 85. This part of the amount is then taxed annually. The balance of the housing promotion account is reduced accordingly year by year. Alternatively, you can also pay tax on the amount in the housing promotion account as a lump sum. In this case, only 70% of the amount entered in the housing promotion account is taxed. You can make use of this option either at the beginning of the payout phase or in a later year.
Further details can be found in the BMF circular "Tax incentives for private pension provision" dated 21.12.2017, BStBl I 2018 p. 93, margin nos. 246-289.