What does depreciation according to section 7 (4) of the Income Tax Act mean?

Depreciation according to § 7 para. 4 EStG refers to straight-line depreciation that can be used for any building that is rented out or used for business purposes. For houses built by 31 December 1924, the buyer can deduct 2.5 percent for 40 years.

For properties built after 31 December 1924, buyers can deduct two percent of the purchase costs excluding land as business expenses for 50 years. The depreciation period starts anew with each buyer, even if the previous buyer has already depreciated the building. Depreciation begins in the year of purchase or completion – for this year, however, only on a pro rata basis.

Current: For properties built (completed) after 31 December 2022, buyers can deduct three percent of the purchase costs excluding land from tax for 33 1/3 years.