Anschaffungsnahe Herstellungskosten (15 % rule)
Renovation soon after purchase that is capitalised instead of deducted.
Under §6 Abs. 1 Nr. 1a EStG, repair and modernisation costs incurred within three years after buying a building are treated as Herstellungskosten when they exceed 15 % of the building's acquisition cost, net of VAT. The test is cumulative across the three years. If you cross it, all qualifying costs move into the depreciation basis and are written off over decades instead of being deducted immediately — including costs from earlier years, which can reopen an assessment. Routine yearly maintenance and costs for extensions are outside the 15 % count, since the latter are Herstellungskosten anyway. Plan large renovations after purchase with this threshold in mind and track each invoice against it.
Last reviewed: by Yann Lephay.