For a limited period, declining-balance depreciation (AfA) in decreasing annual amounts is to be introduced for residential buildings — this is provided for in the Wachstumschancengesetz (Growth Opportunities Act). The depreciation is to amount to 6 % per year and is always to be calculated on the carrying amount of the preceding year. As long as declining-balance depreciation is applied, deductions for extraordinary technical or economic wear and tear are not permitted; however, in such cases a switch to straight-line depreciation is possible. The depreciation may also be claimed for residential buildings located outside Germany within the EU or the European Economic Area. In general, the residential buildings must be used for income-generating purposes, i.e. within the scope of rental activities. Owner-occupation is excluded.
Note
The new declining-balance AfA is permissible if construction of the building begins after 30 September 2023 and before 1 October 2029. In the case of a purchase, the contract must be legally concluded after 30 September 2023 and before 1 October 2029, and the building must be acquired by the end of the year of its completion.