Who is eligible for the special depreciation under Section 7b of the Income Tax Act?
Special depreciation for rental properties: To stimulate the construction of new rental properties in the lower and middle price segments, a temporary special depreciation under § 7b EStG was introduced in 2019 and relaunched in 2022.
Depreciation for building applications between 1.9.2018 and 31.12.2021:
- 5% special depreciation on acquisition or production costs up to 2.000 Euro per square metre of living space in the year of acquisition and the following three years.
- Eligible are buildings with construction costs up to 3.000 Euro per square metre of living space, eligible up to 2.000 Euro.
- The property must be rented for at least 10 years, with no rent cap.
- The deadline is 31.12.2021, and building applications must have been submitted between 1.9.2018 and 31.12.2021.
Depreciation for building applications between 1.1.2023 and 31.12.2026:
- Eligible are building applications between 1.1.2023 and 31.12.2026.
- 5% special depreciation on acquisition or production costs up to the eligible assessment basis in the first four years.
- Eligible are acquisition or production costs up to 4.000 Euro per square metre of living space.
- Eligible are buildings whose construction costs do not exceed 5.200 Euro per square metre of living space.
- Purchase required by the end of the year of completion.
- Requirement is an "Efficiency House 40" with sustainability class/efficiency building level 40.
Practical tips:
- Monitor possible changes in cost reference values (4.000 Euro / 5.200 Euro).
- De minimis regulation applies to income from profits, not to income from renting and leasing.
- New apartments from 2022 are excluded from § 7b EStG.
