The property comes first
Location, layout and specification determine whether people want to live there. This quality underpins a sound investment; tax benefits are additional. We discuss the unit, target tenants and investment horizon with you.
The principle
Germany’s AfA allows building costs for a let property to be deducted over time; land is excluded. Under declining-balance depreciation, 5 per cent of the remaining value is deducted each year. More depreciation therefore falls in the early years, when initial commitments are greatest.
A worked example
For a building tax basis of €600,000 and an illustrative marginal tax rate of 40 per cent:
| Depreciation | Declining balance 5% | Straight line 3% |
|---|---|---|
| Year 1 | €30,000 | €18,000 |
| Year 2 | €28,500 | €18,000 |
| Year 3 | €27,075 | €18,000 |
| Year 1 tax relief, simplified | €12,000 | €7,200 |
In the first full year, this produces a calculated additional €4,800 of tax relief. A later switch to straight-line depreciation is legally possible.
Eligibility requirements
Section 7(5a) EStG applies to residential buildings and apartments in the EU and EEA. For construction, work must begin between 1 October 2023 and 30 September 2029. For purchases, the contract must fall within that period and acquisition must occur by the end of the completion year. The home must be let; this depreciation does not apply to purely owner-occupied homes.
Additional depreciation under section 7b
The special allowance has further conditions, including Effizienzhaus 40 with QNG certification, cost limits and letting requirements. QNG certification is not confirmed for Aurum projects, so this allowance is not promised.
Start well prepared
We provide property documents and support financing arrangements. Your tax adviser checks eligibility using the contract, completion date, building share and use. Tell us your investment horizon and we will show the available units.
Checklist
- Have letting intent, contract date and acquisition timing checked.
- Determine building and land shares appropriately.
- Compare declining-balance and straight-line depreciation with your tax adviser.
- Calculate rent, vacancy, costs and finance independently of tax benefits.
- Never infer section 7b or QNG eligibility from Effizienzhaus 40 alone.
The idea becomes concrete
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