Select "yes" if you want to enter special depreciation for monuments or buildings in redevelopment areas.

According to sect. 7h of the Income Tax Act (EStG), you may, for measures within the meaning of sect. 177 of the Building Code (BauGB) which have been carried out on buildings in a formally defined redevelopment area or urban development area, apply increased special depreciation for modernisation and repair work instead of the depreciation which has to be calculated according to sect. 7 paras. 4 and 5 of the Income Tax Act (EStG).

Special depreciation includes

• Renovation building according to sect. 7h of the Income Tax Act (EStG): In the case of construction measures started before 1 January 2004, the production costs can be distributed over 10 years at an annual rate of 10%.
• In the case of construction measures started on or after 1 January 2004, production costs can be deducted as income-related expenses at 9% for each of the first eight years and 7% for each of the following four years.
• Architectural monuments according to sect. 7i of the Income Tax Act (EStG): Regulation as for sect. 7h of the Income Tax Act (EStG).

Select "yes" if you wish to use special depreciation under section 7b of the Income Tax Act for this rental property.

This special depreciation allows you to claim tax relief on up to 5% of eligible costs per year for four years in addition to the standard depreciation (AfA). The standard depreciation (2%) remains in place.

• The building application or notification was submitted between 01.01.2023 and 30.09.2029.
• The acquisition or construction costs must not exceed 4.000 Euro per square metre of living space.
• The total costs (including all construction and ancillary costs) must not exceed 5.200 Euro/m².
• The property is located in the European Union (EU).
• The property is rented out on a long-term basis for at least ten years (from purchase or completion).
• The building meets the Efficiency House Standard 40 with sustainability class – a corresponding certificate is required.

Note: The maximum assessment basis for the special depreciation is 2.000 Euro per square metre of living space.

Important to know:

• The purchase of a newly built flat can also be subsidised – if the purchase contract is concluded in the year of completion.
• This special depreciation is considered a de minimis aid. However, a check of the aid limits is only necessary for business income (e.g. from commercial operations or self-employment). No check is required for pure rental income.
• Flats with a building application or notification in 2022 are excluded from the subsidy.

Note: Due to increased construction costs, the legislator is examining whether the current subsidy limits of 4.000 Euro and 5.200 Euro per m² should be adjusted.

Depreciation in accordance with sect. 7 para. 4 of the Income Tax Act (EStG) is as follows:

• 2,5% per year for buildings completed before 1 January 1925
• 2% per year for buildings completed after 31 December 1924 and before 1 January 2023
• 3% annually for buildings completed after 31 December 2022

of the acquisition or production costs of the building. In exceptional cases, you can claim higher depreciation if the actual service life is shorter. A shorter service life must be justified and proven.

Notwithstanding this, you can apply declining balance depreciation to a building or flat in Germany or in an EU/EEA country in accordance with sect. 7 para. 5 of the Income Tax Act (EStG).

The amounts are as follows:

• Before 1 January 1995: 8 years 5% each, 6 years 2.5% each, 36 years 1,25% each
• Before 1 January 1996 (residential use): 4 years 7% each, 6 years 5% each, 6 years 2% each, 24 years 1,25% each
• After 31 December 1995 and before 1 January 2004 (residential): 8 years 5% each, 6 years 2.5% each, 36 years 1,25% each
• After 31 December 2003 and before 1 January 2006 (residential): 10 years 4% each, 8 years 2.5% each, 32 years 1,25% each

The calculation begins with the building application (in the case of construction) or the legally effective conclusion of the obligatory contract before the specified date.

You must determine the depreciation for movable assets that are not buildings (e.g. fitted kitchen) in accordance with sect. 7 para. 1 of the Income Tax Act (EStG) on the basis of the normal useful life.

Smaller assets that cost no more than 800 Euro (excluding VAT) can be fully deducted in the year of purchase.