Tax depreciation (AfA) is the most important fiscal instrument for property owners. We explain the various depreciation methods and present optimisation strategies.
AfA: The Tax Foundation of Real Estate Investment
Tax depreciation (AfA) is the central lever for tax optimisation available to property owners. Through annual depreciation, you reduce your taxable income without any actual cash outflow.
Fundamentals of Building Depreciation
Assessment Base
Depreciation is calculated solely on the building component of the purchase price. The land component is not depreciable. The allocation is based on the ratio of fair market values.
Straight-Line Depreciation under § 7 Abs. 4 EStG
For buildings completed after 31 December 2022: 3 per cent annually (33 years useful life). For older buildings: 2 per cent (50 years). For buildings completed before 1 January 1925: 2.5 per cent.
Special Depreciation and Accelerated Write-Offs
Special Depreciation under § 7b EStG
For new residential construction: 5 per cent annually over four years, in addition to straight-line depreciation. Construction cost ceiling: EUR 5,200 per square metre of residential space.
Accelerated Depreciation for Listed Buildings (§ 7i EStG)
For rental properties: 9 per cent over eight years, then 7 per cent for four years. For owner-occupied properties: 9 per cent over ten years (§ 10f EStG). Requirement: certification from the heritage conservation authority.
Urban Renewal Areas (§ 7h EStG)
The same accelerated rates as for listed buildings apply to modernisation measures in designated urban renewal areas.
Optimisation Strategies
Actively Structure the Purchase Price Allocation
A higher building component results in a higher depreciation base. The allocation should be documented in the purchase agreement and supported by an expert valuation.
Consider Acquisition-Related Production Costs
Modernisation costs within the first three years exceeding 15 per cent of the building acquisition costs are treated as production costs (§ 6 Abs. 1 Nr. 1a EStG) and must be depreciated over the useful life.
Demonstrate a Shorter Useful Life
An expert report can substantiate a shorter remaining useful life, thereby resulting in higher annual depreciation.
Conclusion
The depreciation rules offer a wide range of optimisation opportunities. The tax advisors at compleneo develop a tailored depreciation strategy that sustainably reduces your tax burden.
