(2022)
What does depreciation according to section 7 (5) of the Income Tax Act mean?
Depreciation according to § 7 para. 5 EStG refers to the declining balance depreciation, which allows builders or buyers to depreciate new buildings or flats at a high rate in the first few years. Declining balance depreciation is no longer possible for properties with a building application or purchase contract from 1 January 2006. Since then, only straight-line depreciation has been permitted.
For previous purchases, the following depreciation rates apply:
Building application/purchase contract from 30 July 1981 to 28 February 1989 and from 1 January 1996
- First 8 years: 5 percent
- Next 6 years: 2.5 percent
- Next 36 years: 1.25 percent
Building application/purchase contract from 1 January 2004 to 31 December 2005
- First 10 years: 4 percent
- Next 8 years: 2.5 percent
- Next 32 years: 1.25 percent
Building application/purchase contract from 1 March 1989 to 31 December 1995
- First 4 years: 7 percent
- Next 6 years: 5 percent
- Next 6 years: 2 percent
- Next 24 years: 1.25 percent
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