Save taxes – Degressive depreciation – tax advantage for capital investors

On 22 March 2024, the Bundesrat (Federal Council) passed the new Growth Opportunities Act, which included the introduction of a declining balance depreciation rate of 5% for new residential buildings.

This new tax method allows capital investors (whether renting to a family member or to a third party) and investors to depreciate their investment in new residential buildings and individual owner-occupied apartments at a higher rate than was previously possible.

With investment costs of EUR 400,000, the investor can write off EUR 20,000 (5% of EUR 400,000) against tax in the first year and EUR 19,000 in the second year (EUR 400,000 minus EUR 20,000 from the first year = EUR 380,000 residual value). Within six years of completion/acquisition of the property, the investor can thus claim around EUR 106,000 for tax purposes, meaning that no tax has to be paid on this amount.

If for example the investment is EUR 1 million, the amount that can be claimed for tax purposes increases to around EUR 266,000, as in the example above. For capital investors and investors this means not only a quicker reduction of investment costs but also a maximising of returns.

Important:

The notified start of construction, not the building application, is the decisive criterion.

Please note that the respective land portion is not taken into account in the depreciation. This is because income tax law stipulates that only the loss in value of a property is taken into account in the form of depreciation, but not the land portion as this is not subject to loss in value.

Those who decide now to buy an owner-occupied apartment in the GOLDECK Nr. 1 project in Düsseldorf will benefit immediately from these new depreciation possibilities, and they can thus partially offset any financing costs incurred.

For detailed information see the page:

BMWSB - Startseite - Degressive AfA - 5 Prozent, 6 Jahre! (bund.de)