DIP partner Aengevelt Immobilien continues to see the current tax treatment of the acquisition-related maintenance costs as a major obstacle to the comprehensive modernisation of the housing stock, which is urgently required, not least for reasons of climate protection. According to the current regulation, expenses for repair and modernisation are counted as production costs if they account for more than 15% of the acquisition costs within the first three years after acquisition. This means that these expenses cannot be claimed for tax purposes in the years in which they were incurred, but can only be depreciated at an annual rate of 2% over 50 years within the framework of depreciation.
Since this 15% limit is clearly too low in view of the sum to be invested for a comprehensive, sustainable renovation of the portfolio, it represents a tax-disadvantageous treatment for buyers of rented used apartments or apartment buildings and is therefore a significant obstacle to investment. As a result, energy-efficient and immediately targeted renovation investments are often postponed for many years in order to avoid tax disadvantages. But this serves neither the tenants nor society as a whole.
According to Section 6 (1) No. 1a of the Income Tax Act, repair and modernisation measures carried out within three years of the acquisition of the building are counted as construction costs if the expenses excluding VAT exceed 15% of the acquisition costs of the building (near-acquisition production costs). This means that these expenses cannot be claimed for tax purposes in the years in which they were incurred, but can only be depreciated at an annual rate of 2% over 50 years as part of the depreciation. The different tax treatment of manufacturing costs and maintenance costs therefore has serious economic consequences.
Unrealistic depreciation practice.
In practice, owners of rented residential units often argue with the tax offices as to whether the expenses are to be regarded as production or maintenance costs, as the legal requirements for this are comparatively imprecise. The new BMF letter of 26 January 2026 also contains only examples that do not cover all specific cases. In ambiguous cases, the tax offices tend to regard the expenses as manufacturing costs, so that they cannot be claimed in the current year to reduce profits, but can only be depreciated over 50 years. However, this holding period is unrealistic in life and real estate practice. For purchasers of unrenovated or only partially renovated second-hand properties, this means that it makes economic sense to limit the modernisation measures in the first three years after acquisition in such a way that the 15% limit is not reached, even if this “postponement” or “denomination” is actually in nobody’s interest.
15 % limit is clearly too low.
The example of a typical condominium shows that the 15% limit is quickly exceeded, even if only the most necessary renovation measures are carried out after purchase.
Example:
- In the case of an unrenovated, 80 m2 condominium with a purchase price of EUR 1,200/m² or EUR 96,000, the 15% limit is EUR 180/m² or EUR 14,400 in total.
- If one takes into account that a bathroom renovation, which is unavoidable for needs-based rentability, already costs an average of EUR 12,000, there is only a marginal margin of less than EUR 2,400 for small measures in this case.
- In fact, however, other sensible or necessary measures such as replacing old windows with energy-saving windows (EUR 4,000 to 6,000), façade insulation with a simple external thermal insulation composite system (EUR 3,500) or converting the heating system to a heat pump (at least EUR 6,000 after deduction of subsidies) would lead to the 15% limit being exceeded several times.
- The consequence would be that all modernization expenses could only be deducted at 2% per year.
Even with a purchase price of up to EUR 3,000 /m² of living space, the tax leeway of up to a maximum of 15% – including the ancillary trades that are also typical for renovation on the basis of the current construction cost level is usually still not sufficient.
Tax law inhibits necessary modernization measures.
In this way, tax law means that in many cases modernization measures are omitted, which would be urgently needed in the interest of tenants and climate protection, especially in the case of older apartments in need of renovation. Aengevelt points out that the lower the purchase price, the greater the inhibition of investment by tax law. This leads to the paradoxical effect that the residential units that have the greatest need for energy-efficient renovation have the least scope for investment in this regard.
Dr. Wulff Aengevelt, Managing Partner of DIP partner Aengevelt: “The energy-efficient refurbishment, especially of existing buildings, is a climate policy priority. Therefore, it must finally be made easier by the Ministry of Finance in terms of providing affordable rental housing. Against the backdrop of increasing demands on quality of living and on the contribution to be made by the socially committed real estate industry to achieving climate change, the 15% limit is a fossil from the dustbin. The threshold has long since ceased to be performance-related, but simply a stumbling block that prevents investment in many ways, which leads to the fact that noteworthy portfolio renovations after the purchase of real estate, instead of being implemented promptly, are postponed for years at best. In the interest of society as a whole and thus also in the interest of climate protection, the tax regulation on acquisition-related expenditure must be fundamentally revised with regard to the building stock. In order to shorten a discussion that is typical of bureaucracy, which lasts for years, all measures that demonstrably improve the energy condition of a property could or should, for example, be exempted from the 15% quota. Otherwise, the targeted climate targets for the building stock in particular are definitely achievable.”
