The reintroduction of declining-balance depreciation for buildings required adjustments and clarifications to other depreciation options.
What is changing
§ 7a EStG, which contains rules for special depreciation, is being aligned with the reintroduced declining-balance depreciation.
After a special depreciation — such as the one available for the construction of new rental housing — further depreciation may also be calculated on the basis of the residual value and the percentage rate applicable to declining-balance depreciation.
This is possible if the asset was already being depreciated on a declining-balance basis before the end of the special depreciation period. In other words, once the special depreciation period ends, the remaining depreciation can be structured flexibly, provided that declining-balance depreciation had been applied previously.
Entry into force
This applies retroactively from the 2023 assessment period.
Frequently asked questions
Frequently asked questions
How does the reintroduction of declining-balance depreciation affect § 7a EStG?
§ 7a EStG, which governs special depreciation rules, has been adapted to the reintroduced declining-balance depreciation for buildings. This ensures that, after a special depreciation period ends, further depreciation can also be calculated based on the residual value and the applicable declining-balance rate.
Can declining-balance depreciation continue after a special depreciation?
Yes. After a special depreciation ends – for example on newly built rental apartments – further depreciation can be based on the residual value and the applicable declining-balance rate. However, this requires that the asset was already being depreciated on a declining-balance basis before the end of the special depreciation period.
What is the requirement for declining-balance depreciation after the special depreciation period ends?
Declining-balance depreciation on the residual value after expiry of the special depreciation is only permitted if the asset was already depreciated using the declining-balance method before. If this was not the case, this flexible follow-up depreciation is not available.
From when does the amendment of Section 7a EStG regarding the declining-balance depreciation for buildings apply?
The new rule applies retroactively from the 2023 assessment period. Taxpayers can therefore apply the amended provisions already in their 2023 tax return.