Subsidies for private housing

In order to combat the housing shortage and promote investment, the legislator has introduced two new depreciation options for residential buildings. The declining balance method of depreciation allows for higher depreciation to be claimed for tax purposes in the first few years, while the special depreciation for new rental housing offers additional depreciation for certain construction projects. Both measures are designed to create incentives to support the construction and rental of residential property.

Declining balance method of depreciation for residential buildings

In order to counteract the housing shortage and create an investment incentive, the legislator has reintroduced the declining balance method of depreciation for a limited period of time. For residential buildings for which construction began after 30 September 2023 and before 1 October 2029, there will thus be an option to use the declining balance method of depreciation at a rate of 5% of the respective residual book value in future. This shall also apply to purchased real estate under certain conditions. With the declining balance method of depreciation, significantly higher depreciation can be claimed for tax purposes in the first few years than with the straight-line depreciation of 3%. We will support you in choosing the appropriate depreciation method for your real estate and provide you with advice on all matters relating to this topic.

Special depreciation for new rental housing

In order to boost new rental housing, the legislator has introduced a temporary special depreciation. Under certain conditions, this regulation allows for an additional annual depreciation of up to 5% in the year of acquisition or construction and in the three subsequent financial years. Construction projects for which the building application or notification was submitted after 31 August 2018 and before 1 January 2022 or after 31 December 2022 and before 1 October 2029 are eligible for this. The real estate must thereupon be let for residential purposes in return for payment. By combining the depreciation options in the right way, more than a third of the acquisition or construction costs can be written off in the first four years. We will be happy to help you to optimise the depreciation of your real estate and explain how the various depreciation options work.