From 2025, new regulations on the depreciation of real estate are expected to come into force, affecting both property owners and investors. Depreciation for wear and tear (AfA) plays a central role in real estate taxation, as it enables the gradual deduction of the acquisition and production costs of a property over its useful life. With the new plans, the German government wants to promote investment in residential construction and at the same time provide greater support for climate protection measures.
In this comprehensive guide, you will find all the important information on the planned changes to depreciation options from 2025 and find out how these could affect your tax burden and investment decisions.
1. the current status of depreciation rules
To understand the planned changes, it is helpful to understand the current depreciation rules:
- Straight-line depreciation (AfA): The current depreciation method for real estate is straight-line. For residential properties built after January 1, 1925, the depreciation rate is 2% per year, which corresponds to a useful life of 50 years.
- Degressive depreciation: This method was only introduced temporarily in the past and then abolished again. It allowed for higher depreciation in the first few years after acquisition, but was no longer permitted.
Special regulations also apply to listed properties and buildings in redevelopment areas, where refurbishment costs can be written off against tax over shorter periods.
2 Planned changes from 2025
The German government is planning to reform the tax system for real estate from 2025 in order to boost housing construction and at the same time create more incentives for sustainable construction and energy-efficient renovations. Here is an overview of the most important changes:
2.1. Anhebung der linearen Abschreibung für Neubauten
One of the key changes concerns straight-line depreciation for new buildings. The current depreciation rate of 2% will be increased to 3% per year. This adjustment means that new buildings can be depreciated over a period of 33 years from 2025, instead of the current 50 years. This significantly shortens the time in which property owners can claim their acquisition costs against tax and leads to faster tax relief.
Advantages of this change:
- Higher annual depreciation: property owners can deduct higher amounts from their taxes more quickly.
- Incentive for new construction: Faster depreciation could motivate investors to invest more in residential construction, which could increase the supply of housing in the long term.
2.2. Förderung von energetischen Sanierungen
As part of the climate protection measures, the energy-efficient refurbishment of existing properties will also receive greater tax incentives. It is already possible to write off the costs of energy-efficient modernization, but these regulations could be extended from 2025. Special depreciation allowances are being discussed for measures such as:
- Improvement of thermal insulation,
- Replacement of inefficient heating systems,
- Installation of solar systems and other sustainable energy sources.
These measures are aimed at reducing the CO₂ emissions of properties and lowering energy consumption, which not only benefits climate protection but also reduces operating costs for owners in the long term.
2.3. Erleichterungen bei der Abschreibung von Sanierungskosten
Adjustments to the depreciation rules are also expected for properties in redevelopment areas and listed buildings. Currently, refurbishment costs can be depreciated over 12 years, which corresponds to an annual depreciation of 9% in the first 8 years and 7% in the following 4 years.
With the changes from 2025, these incentives could be strengthened to promote the preservation and modernization of old buildings. This would be particularly interesting for private investors who would like to contribute to the expansion of living space or energy upgrading of historic buildings through renovations.
3. impact of the changes on various property owners
The planned changes from 2025 will affect different types of property owners differently. Here are the key aspects:
3.1. Neubauprojekte
Property owners who invest in new builds benefit most from the increased depreciation rate of 3%. The shorter depreciation period results in faster tax relief, which can significantly increase the return on investment. This regulation could provide an additional incentive for private investors and residential construction companies in particular to launch new projects.
3.2. Bestandsimmobilien
Owners of existing properties will benefit from the improved depreciation options for energy-efficient renovations. As more and more regulations and requirements are being placed on the energy efficiency of properties, this is an important step towards securing the long-term value of the property and reducing the tax burden at the same time.
3.3. Denkmalgeschützte Immobilien und Sanierungsobjekte
The extended depreciation options are of particular interest to owners of listed properties and refurbishment projects. Renovations of historic buildings are often associated with high costs, so easier depreciation could lead to more investors investing in the preservation of such buildings.
4 What should property owners do now?
The planned changes from 2025 offer many advantages, but also challenges. To be optimally prepared, property owners should consider the following steps now:
4.1. Frühzeitige Planung von Neubauvorhaben
If you are planning to build a new residential building, it could make sense to delay completion until 2025 in order to benefit from the increased depreciation. Investors should also check how the tax changes will affect their financing and overall return.
4.2. Prüfung von energetischen Sanierungsmaßnahmen
For owners of existing properties, it is worth considering an energy-efficient modernization. As refurbishment costs may be written off more quickly from 2025, a detailed analysis of the costs and benefits should be carried out. This includes measures such as the replacement of heating systems, insulation measures and the installation of renewable energy sources.
4.3. Steuerliche Beratung in Anspruch nehmen
Given the complexity of the planned changes, it is advisable to seek tax advice in good time. An experienced tax advisor can help you to develop the optimum depreciation strategies and ensure that you take full advantage of all tax benefits.
5 Conclusion: Changes to depreciation options for property owners from 2025
The changes to depreciation options planned from 2025 represent a significant innovation for property owners in Germany. In particular, the increase in straight-line depreciation for new buildings to 3% and the increased promotion of energy-efficient renovations offer attractive financial incentives. Property owners should prepare for the new regulations at an early stage and check how they can make the most of them. There are lucrative opportunities for tax optimization, particularly for new buildings and energy-efficient renovations.