German Taxation: Tax incentives to build new apartments

On 4 February 2016 Germany’s Federal Cabinet approved a draft bill on tax incentives for new apartments. The apartments must be rented out for residential purposes for at least 10 years. The residential buildings must be constructed between 1 Januar 2016 and 31 December 2018. Furthermore the residential buildings must be situated in specific regions.

The aim of the incentive is to provide 100,000 additional flats and apartments in Germany’s metropolitan regions.

Construction costs of qualified buildings should not exceed EUR 3,000 per square metre.

The bill provides additional depreciations of 10% for 2 years and 9% for the third year on manufactioring costs of apartments (maximum base of EUR 2,000 per square metre). This means that in addition to the regular depreciation of 2% per year a total of 35% of manufactioring costs can be deducted for tax purposes in the first 3 years.

Author: Peter Scheller, Steuerberater – Master of International Taxation

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