A new rental apartment building is calculated with an initially higher declining (degressive) building depreciation. The early relief can be relevant in tax planning. For financing, however, it must be clear that the percentage is applied to a decreasing residual value and that no permanent cash subsidy arises.
Have the appropriate legal case confirmed
§ 7 Absatz 5a EStG permits, under its conditions, a degressive depreciation for the described residential buildings instead of the linear approach stated there. The provision includes, among other things, a commencement of production or contract period after 30.09.2023 and before 01.10.2029 as well as further acquisition, location and usage conditions. The rate is five per cent of the respective book value. [DEGRESSIV]
The specific property must be assigned professionally. An arbitrary used apartment is not rendered eligible for the new-build case solely by purchase within the period. The decisive commencement of production is also examined according to the statutory rule, not taken from an advertising date.
Calculate a fully assumed two-year comparison
We assume an already confirmed entitlement, €300.000 relevant building base and full annual periods without further changes. Degressively, five per cent in the first year equals €15.000. The remaining book value is €285.000. In the second year five per cent of this amounts to €14.250.
For the comparison, an equally permissible linear rate of three per cent is assumed: €9.000 per full year. In the first two years that would be €18.000 in total versus €29.250 in the degressive model. The difference in the deduction amounts to €11.250.
An earlier deduction is not additional cash receipt
The €11.250 is neither a tax refund of that amount nor a guaranteed capital gain. The individual tax effect depends on your circumstances. Continuing degressively further uses the then smaller residual value; five per cent of the original €300.000 each year would be an incorrect calculation.
§ 7 Absatz 5a also contains the possibility of switching to linear depreciation and rules for the subsequent assessment. [DEGRESSIV] Which method and, if applicable, which change is appropriate for your case requires a complete tax comparison calculation.
Consider financing beyond the first years
Please do not only show the first post-tax monthly figure. The plan also needs later years with appropriate depreciation bases and full loan instalments. Changes, sale and personal tax circumstances are examined individually.
A prepared decision can thus assess a temporal tax advantage objectively. It does not treat it as a certain return of the building nor as a permanently equally large free payment.