Depreciation on Real Estate: How to Get the Maximum Out of It
Depreciation allowance – known in Germany as AfA – is a powerful tool for landlords. Every year, you can claim a portion of the building's value for tax purposes without a single euro actually leaving your account. Knowing the rules can permanently and significantly reduce your tax burden.
Basics: What gets depreciated?
Only the building portion is depreciated – not the land, since land does not wear out. That's why the allocation of the purchase price between building and land is so important: the higher the building share, the higher the annual depreciation.
The statutory depreciation rates at a glance:
- Residential buildings built after 1924: 2% per year (50 years)
- Residential buildings built before 1925: 2.5% per year (40 years)
- Commercial buildings (non-residential): 3% per year
📊 Example: Apartment for €300,000
Building share: €200,000. Depreciation rate: 2%. Annual depreciation: €4,000. At a marginal tax rate of 42%, this means annual tax savings of €1,680 – with no cash outflow whatsoever.
Insider tip: Remaining useful life appraisal
The law assumes a simplified useful life of 50 years. But what if your property will realistically only last another 30 years? You can use an expert appraisal to demonstrate that the actual remaining useful life is shorter – and increase your depreciation accordingly.
💡 What this means in practice:
With a 30-year remaining useful life, the depreciation rate rises from 2% to 3.33%. For a building value of €300,000, that's €1,000 more in depreciation per year – a significant tax saving over the entire holding period. An appraisal costs between €1,000 and €5,000 depending on the property and often pays for itself in the first year for larger properties.
⚠️ Important: commission the appraisal early
Commission the appraisal as soon as possible after purchase. The longer you wait, the harder it becomes to explain to the tax office why a shortened useful life is suddenly being applied. Also: if you subsequently carry out extensive renovations, the useful life may be extended again – potentially rendering the appraisal worthless.
Our cooperation partner and industry leader for remaining useful life appraisals offers you a free initial assessment of your property. If you commission within 30 days, you receive an exclusive €100 discount.
→ nutzungsdauer.comSpecial depreciation for new builds: § 7b EStG
If you build new or buy a new apartment (building permit between 2023 and 2029), you can claim an additional 5% special depreciation in each of the first four years – i.e. 20% extra in total. Condition: acquisition costs must not exceed €5,200 per square metre, and the apartment must be rented out.
📊 Special depreciation in numbers:
New build with construction costs of €500,000. Special depreciation basis: max. €4,000/m². Special depreciation per year: up to €25,000 additionally. Total tax saving over 4 years (at 42% tax rate): up to €42,000 – on top of normal depreciation.
Enhanced depreciation for listed buildings and regeneration areas
Particularly attractive special rules apply to listed buildings or properties in formally designated regeneration areas: renovation costs can be depreciated at up to 9% per year over 8 to 12 years – i.e. 100% in 12 years. This is significantly better than standard straight-line depreciation.
Let all tax tricks be applied automatically
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