How Real Estate Investors can use Depreciation to maximize their Tax Benefits and Returns in Germany
Depreciation rules were already exceptionally generous in Germany compared to other countries, where depreciation of buildings is rarely possible. Recent measures, including those announced on March 22, 2024, make it even more generous with up to 10% depreciation possible.
Dr. Chris Mulder
Published on Apr 4, 2024 . Updated 3 days ago
Depreciation in real estate, known in Germany as "Absetzung für Abnutzung" (AfA), is a method by which property investors can reduce their taxable income. These AfA rules for depreciation allow property owners to write off the value of a building over its useful life.
Private investors often underestimate this benefit: with recent changes, it can be one of the most important benefits when buying an investment home.
Table of Contents
- The impact of the depreciation on your income
- Basic example
- Depreciation rates and periods
- Table: Depreciation (AfA) of real estate in Germany
- Linear vs. degressive depreciation
- Can you depreciate a depreciated building?
- Sonder AfA for older rental properties
- Tax consultation
- How to claim AfA in tax returns
- Conclusion
- Annex I How to Determine Your Marginal Tax Rate
