New special depreciation for rental properties

The "Act on the Tax Promotion of New Rental Housing" of 04.08.2019 introduced a temporary special depreciation under § 7b EStG to promote investment in new rental housing. This applied to investments for which a building application or notification was made between 01.09.2018 and 31.12.2021.

• The 7b special depreciation amounted to 5% of the acquisition or production costs in each of the first four years, up to 2,000 Euro per square metre of living space.
• An additional linear depreciation of 2% per year was deductible, but based on the actual acquisition or production costs (§ 7 para. 4 EStG).
• Only buildings with construction costs of no more than 3,000 Euro per square metre of living space were eligible.
• The subsidised property had to be rented out for at least 10 years, with no rent cap.

From 01.01.2023, the expired 7b special depreciation will be renewed. It now applies to rental apartments for which a building application or notification is made between 01.01.2023 and 30.09.2029, provided certain (energy) efficiency requirements are met.

• The 7b special depreciation amounts to 5% of the acquisition or production costs in each of the first four years up to the eligible assessment basis.
• An additional linear depreciation of 2% per year is also possible, but based on the actual acquisition or production costs.
• Eligible acquisition or production costs are up to 4,000 Euro per square metre of living space.
• Construction costs must not exceed 5,200 Euro per square metre of living space.