New residential construction should get going again
In order to get housing construction going again, the legislature has decided on a degressive depreciation rate of 6 percent for the construction of new rented apartments in Section 7 Paragraph 5 a EStG, which replaces the normal linear depreciation in accordance with Section 7 Paragraph 4 No. 2 a EStG of 3 percent can be claimed. With degressive depreciation, the assessment basis is reduced each year by the depreciation used. This reduced book value will be the basis for depreciation next year.
In contrast to the special depreciation according to Section 7 b of the new version of the EStG, compliance with a special efficiency standard is not required to use the declining balance depreciation. The general requirement is that the building meets the requirements of efficiency class 55. There is also no upper limit on construction costs. The degressive depreciation can only be used for rented apartments because no business expenses can be deducted for owner-occupied apartments.
The degressive depreciation for new residential construction New residential construction should get going again In order to get housing construction going again, the legislature has decided on a degressive depreciation rate of 6 percent for the construction of new rented apartments in Section 7 Paragraph 5 a EStG, which replaces the normal linear depreciation in accordance with Section 7 Paragraph 4 No. 2 a EStG of 3 percent can be claimed. With degressive depreciation, the assessment basis is reduced each year by the depreciation used. This reduced book value will be the basis for depreciation next year. In contrast to the special depreciation according to Section 7 b of the new version of the EStG, compliance with a special efficiency standard is not required to use the declining balance depreciation. The general requirement is that the building meets the requirements of efficiency class 55. There is also no upper limit on construction costs. The degressive depreciation can only be used for rented apartments because no business expenses can be deducted for owner-occupied apartments. New apartments The degressive depreciation should only apply to newly built apartments. In this respect, a distinction must be made between the cases in which the investor builds the building on his own land and is therefore the manufacturer for tax purposes and the cases in which he purchases the building for a fee and therefore writes it off from the acquisition costs.
Source: IVD News
