Monument protection preserves important examples of building culture, but often also poses special economic challenges for owners and project developers. How tax breaks can help to make the preservation and renovation of architectural monuments economically viable is shown in the new “BiB Guide to Obtaining Tax Breaks for Monuments” of the Association for Building in Existing Buildings (BiB).
The guide provides owners, project developers, architects, specialist planners and project managers with practice-oriented assistance in dealing with the so-called monument depreciation. The focus is on the increased depreciation options according to § 7i EStG as well as comparable regulations for buildings in redevelopment areas according to § 7h EStG. In addition, the guide deals with §§ 10f, 10g and 11b EStG, among others.
“In practice, building in existing buildings often fails not because of will, but because of complex procedures and a lack of orientation. As BiB, we want to start right there: bundling knowledge, making processes understandable and providing those involved with concrete tools. The new guideline for monument depreciation is a very good example of this,” says Sarah Dungs, BiB Chairwoman.
Nicola Halder-Hass, BRICKS&BEYOND GmbH and BiB Advisory Board Member for Monument Protection, explains: “Listed buildings not only need good ideas, but also economic prospects. The monument depreciation can make this possible if owners know how to use it correctly.”
What matters is what happens before construction begins
A central message of the guide is that the increased deductions are linked to clear conditions. These include the monument status of the object, the necessity of the measures for preservation as an architectural monument and sensible use and, in particular, the opening of the procedure for obtaining the tax benefits with the responsible monument authority before the start of construction.”
This point in particular is crucial for practice. Missed coordination or changes during construction can lead to expenses not being recognised for tax purposes, even if a building permit has been issued for the measures, because the procedure for obtaining the monument depreciation is a procedure independent of the building permit. For this reason, tax issues should already be included in the planning of a monument project and the responsible authorities and consultants should be involved at an early stage.
From planning to certification
The new BiB guide therefore guides those involved step by step through the procedure. It explains which properties can generally be eligible for preferential treatment, which expenses can be certified and how production costs and maintenance expenses differ, for example. In addition, it deals with specific questions from project practice, such as ancillary construction costs, new building parts and outdoor facilities as well as photovoltaic systems, homeowners’ associations and the handling of listed buildings in redevelopment areas.
This is not just about preserving historical substance. Under certain conditions, measures that adapt a listed building to contemporary living or working conditions – i.e. serve sensible use – can also be tax-privileged. The prerequisite is that the monument status is not significantly impaired and that the new use is subordinate to the historic building structure.
The monument depreciation can represent a relevant economic lever in this context. According to Section 7i of the Income Tax Act, preferential expenses for listed buildings can be depreciated at up to nine percent in the year of construction and in the following seven years, and up to seven percent in the four following years.
BiB wants to turn “Yes, but…” into “Yes, because!”
With the guideline, the association is pursuing an approach that goes beyond the mere presentation of tax regulations. The aim is to make obstacles to building in existing buildings visible at an early stage and to provide those involved with concrete solutions for project practice. Especially in the case of listed buildings, the preservation of existing resources, responsibility for building culture, today’s usage requirements and economic efficiency come into direct contact with each other.
The guideline is therefore intended to provide clarity at an early stage as to which measures can be taken into account, when which coordination is required and which expenditure can be certified. In this way, the BiB wants to contribute to making the preservation and further development of architectural monuments easier and easier to plan.
The guide was prepared by Nicola Halder-Hass and Franziska Bouchard, Forvis Mazars, BiB Advisory Board Member Legal & Tax, with the support of Alina Bär, Tax Advisor at Forvis Mazars. The “BiB Guide to Obtaining Tax Advantages for Architectural Monuments” is available free of charge on the BiB website: .
