How is owner-occupied property subsidised under section 10f of the Income Tax Act?
With § 10f Income Tax Act (EStG), the government promotes investments in the preservation and modernisation of owner-occupied properties with special urban or historical significance. The expenses incurred can be deducted as special expenses for tax purposes, provided all conditions are met.
The funding is particularly attractive for owners investing in redevelopment or development areas, preserving listed buildings, or renovating properties of special public interest.
What is tax-supported under § 10f EStG?
The following measures are tax-favoured:
- Urban redevelopment and development measures in formally designated areas according to § 177 BauGB,
- Preservation and modernisation measures on buildings of special historical, artistic, or urban significance,
- Construction measures on listed buildings, provided an official certificate confirms their eligibility for funding.
The measures must serve the long-term preservation or functional improvement of the property. Purely cosmetic measures or unauthorised alterations are not eligible.
What conditions must be met?
To receive the tax benefit under § 10f EStG, the following conditions must be met:
- Own financing: You have borne the costs yourself.
- Official certificate: A certificate from the relevant municipality or monument authority confirms the type and scope of the eligible measures.
- Self-use: The property is self-used or provided free of charge (e.g. to family members).
When and how can you claim the benefit?
The expenses may only be considered in your income tax return after the completion of the construction measures. Enter the eligible amounts in Form FW. As a rule, the expenses are deducted for tax purposes over ten years.
If you are claiming costs for the first time, please include an itemised list of all invoices with details of:
- Invoice date and amount,
- Description of services,
- Contracting company.
What applies in the case of co-ownership?
If the building is in co-ownership (e.g. with siblings or other persons), you may only claim your own share of the expenses.
Spouses or registered civil partners who are not permanently separated can claim the funding for one property each – i.e. for a total of two properties.
Important restrictions (object restriction)
The tax benefit under § 10f EStG is subject to strict object and lifetime restrictions:
- Only one property: The funding can only be used once in a lifetime for a single building.
- No repetition: If the benefit has already been claimed for one property, it cannot be used again for another building.
- Exclusion with other benefits: If increased depreciation under §§ 82g or 82i EStDV has already been claimed for the same building, § 10f EStG is excluded.
Practical example: BFH ruling of 24.05.2023 (X R 22/20)
A taxpayer claimed maintenance measures on his home from 2006 to 2013 and used the tax benefit under § 10f EStG. In 2014 and 2015, he wanted to apply for funding again for another listed flat. The tax office refused – the Federal Fiscal Court confirmed:
- The tax benefit applies only to one property and once in a lifetime.
- Unused years within the benefit period may expire.
- A change to another building is excluded.
Note
Grants from public funds (e.g. urban development programmes) reduce the eligible expenses and must be stated separately in the tax return.
How is owner-occupied property subsidised under section 10f of the Income Tax Act?
