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Historic preservation depreciation allowance with higher depreciation potential than new construction

"Denkmal-AfA"

Person in a blue shirt using a calculator and laptop on a desk with documents, focusing on financial work.

Planen Sie zeitnah ein Immobilieninvestment in Hamburg oder sind bereits Eigentümer eines Mehrfamilienhauses mit vermieteten Einheiten, steht und fällt der Erfolg Ihres Projekts mit dessen Wirtschaftlichkeit. Den monatlichen Mieteinnahmen stehen Kosten für Reparaturen, Sanierungen, Versicherung und schließlich auch fällige Steuern gegenüber – hier sinnvolle Sparpotenziale zu erschließen, kann sich langfristig also merklich rentieren. Eine dieser Möglichkeiten besteht in der sogenannten "Absetzung für Abnutzung" (kurz AfA), die insbesondere im Bereich der denkmalgeschützten Immobilien in Hamburg dank Sonderregelungen zur Reduzierung der Steuerlast genutzt werden kann. In diesem Blogartikel gibt Engel & Völkers Commercial Hamburg einen kompakten Überblick zum Thema, damit auch Ihr Projekt künftig von der Sonderregelung profitieren kann.

AfA: how it works and the background to special depreciation explained

Since 2018, special AfA has been aimed at private investors who invest their capital in modern houses and apartments. It is part of a political initiative to promote the housing sector and is intended to make acquisition and refurbishment more attractive through tax incentives. The idea is that houses, apartments, and other residential properties in Hamburg wear out over time through continuous use, making construction measures necessary to compensate. This is where AfA comes into play: through this tax relief, in the area of new construction and, in some cases, also for refurbishments, 5% of the acquisition and construction costs can be deducted from tax each year over a period of four years, provided certain requirements are met. But why do we mention this here when this article is actually about monument AfA? Quite simply, in the view of our team of real estate advisors, listed properties offer even greater tax-saving potential than new buildings, which many private investors are not yet aware of.

Historic preservation and AfA: greater tax savings possible on acquisition and refurbishment.

If you refurbish a rented listed property in Hamburg, you can deduct the resulting costs from tax over eight years at 9% per year; for a further four years, 7% per year is possible – in total, 100% of the refurbishment costs. However, it must be ensured that the maintenance measures serve to preserve the monument and continue to enable sensible use. Extensions beyond the historic building fabric, such as the creation of a garden or parking facilities, are not subsidized. In addition, these AfA rates apply only to landlords; owner-occupiers can deduct 9% of the refurbishment costs per year over a period of ten years.

But the savings potential for listed properties in Hamburg is not yet fully exhausted: in addition to refurbishment costs, the purchase price of the corresponding multi-family building can also be deducted from income tax over a fairly long period, depending on the year of construction. If the property was completed before 1925, 2.5% of the purchase price per year can be deducted from tax over 40 years. For listed properties built after 1925, it is 2% per year over a period of 50 years. This means that after the special AfA period ends, the entire purchase price of the property can also be deducted from tax – minus the land value, since the legislator assumes that land does not “wear out.” It is also important to know that if you purchase a multi-family building or apartments under monument protection that have already been refurbished by the previous owner using special AfA benefits, you cannot take over the existing period; you can only apply the regular AfA for existing properties.

Do you have questions about the special AfA for listed properties or about investing in multi-family buildings in Hamburg in general? Engel & Völkers Commercial Hamburg provides free and non-binding advice: take advantage of the market knowledge and experience of our real estate experts and schedule your free initial consultation without obligation. We look forward to hearing from you.