The Federal Ministry of Finance (BMF) has specified the tax treatment of special depreciation for rented new apartments. For investors, it is particularly relevant that in most cases the acquisition costs and not the construction costs are decisive. Choosing the right method for calculating the area can determine whether the tax incentive applies. This is pointed out by the tax consulting firm Ypsilon.
Taxpayers who build or purchase a rented apartment can take advantage of special depreciation options in accordance with Section 7b of the Income Tax Act (EStG). One of the prerequisites is that the building application was submitted between 31 December 2022 and 1 October 2029. “For rental apartments that can be built without a building application or building notification, on the other hand, the start of construction is decisive,” explains Ulrich Creydt, tax consultant and managing director of the Ypsilon Group.
Acquisition costs are decisive
Construction costs are only decisive for the tax calculation if the investor is also the builder. In practice, however, the purchase of real estate predominates. In this case, the acquisition costs and not the construction costs are decisive for the special depreciation after the purchase. The Federal Ministry of Finance specified this in a letter dated 21 May 2025.
The decisive factor for the subsidy is the cost cap of 5,200 euros per square metre: If the acquisition costs exceed this amount, there is no special depreciation. Both newly constructed buildings and newly created apartments in existing buildings, for example by adding storeys or converting attic floors, are eligible. The regulations also affect condominiums and part-ownership.
According to the Federal Ministry of Finance, different areas can be used to determine the acquisition costs per square metre. Both the Living Space Ordinance (WoFlV) and the gross floor area (GFA) according to DIN 277 come into consideration.
“If the taxpayer calculates his living space according to WHP, he can take more areas into account for tax purposes than in a WoFlV calculation. If its acquisition costs are around 5,200 euros per square metre, the choice of method can be decisive,” says Creydt.
Ancillary rooms such as cellars or garages can also be included in the calculation when determining the area on the basis of the GFA – unlike the Living Space Ordinance. On the other hand, costs for outdoor facilities or furnishing are not favoured.
The special depreciation according to § 7b EStG can be claimed in the year of acquisition or completion and in the three following years (preferential period). Up to five percent of the assessment basis can be claimed for tax purposes annually.
Unused shares increase the remaining residual value, which can be depreciated on a straight-line or degressive basis over the remaining useful life from the fourth year onwards. Another prerequisite is that the apartment is rented out for at least ten years. In the case of mixed-use buildings, the acquisition or construction costs must be distributed among the individual parts of the building in accordance with the income tax regulations.
Conclusion: Use creative freedom
Against the background of rising construction and purchase prices, the choice of calculation method can already decide whether a special depreciation is feasible. It is therefore worthwhile for investors to carry out a detailed examination of the acquisition cost structure. In addition, it may be advisable to extend the preferential period of the special depreciation over several years for tax optimization. “Especially for larger investments, a detailed examination is worthwhile. In many cases, considerable tax advantages can be achieved through the right calculation method and forward-looking planning,” concludes Ulrich Creydt.
