German rental property AfA: what can a landlord depreciate?

1. What is AfA?

AfA (Absetzung für Abnutzung) is the German tax term for depreciation. For a rental apartment or house, it spreads the cost of the building across its useful life. The land underneath the property is not depreciated, so the purchase-price split comes before the annual rate.

2. The three rates under §7 Abs. 4 EStG

2.0 % per year (50 years) for standard residential buildings completed from 1925 onward. 2.5 % (40 years) for buildings completed before 1925 — older masonry wears faster. 3.0 % (33 years) for new residential construction completed from 1 January 2023 onward — introduced to stimulate housing supply.

3. The Grund-und-Boden split

AfA applies only to the building, not the land underneath. The purchase price must be split between Gebäudeanteil (depreciable) and Grund und Boden (not depreciable). The safer source-backed path is to use the purchase contract, local land value evidence and, when needed, the BMF Kaufpreisaufteilung work aid instead of a flat percentage.

4. Source-backed land/building example

Purchase price 420,000 EUR plus 42,000 EUR acquisition costs. Supported building share: 70 %. AfA building basis: 323,400 EUR. At 2 % annual AfA, the full-year deduction is 6,468 EUR. If the acquisition month gives six ownership months in the first year, the first-year AfA is 3,234 EUR.

5. First-year pro-rata

If you bought on 1 September of a given tax year, you only owned the property for 4 months that year — so your AfA for the acquisition year is 4/12 of the full-year figure. The first partial year is pro-rated by whole months (not days). An acquisition on 15 September still counts as 4 months for that year.

6. Worked example

Purchase price 420 000 € for a 2018 Berlin apartment. Acquisition 1 July of the tax year. Rate: 2.0 % (post-1925, not post-2023). Building share: 80 %. Building basis: 420 000 × 0.8 = 336 000 €. Annual AfA: 336 000 × 2 % = 6 720 €. Acquisition-year pro-rata (6 months): 3 360 €. Following full year: 6 720 €. Cumulative over 50 years: 336 000 € — identical to building basis.

7. Sonder-AfA and other special schemes

Sonder-AfA under §7b EStG offers a bonus +5 % per year for the first four years on qualifying new residential construction (efficiency-house class, acquisition cost cap). Most expats don't qualify, but if you bought new-build within a KfW Effizienzhaus 40 or 55 standard between 2023 and 2026, check eligibility.

8. What to write where

On Anlage V 2025, AfA goes into Zeile 33 — Absetzung für Abnutzung. The underlying building basis is recorded in the property's Anlagenverzeichnis (depreciation register). Anlage V Easy maintains this register automatically across years.

9. Finding your land ratio with BORIS-D

The Finanzamt often rejects flat 80/20 splits in major cities. You must determine the actual land value using the Bodenrichtwert (standard land value). You find this in the free BORIS-D database (Bodenrichtwertinformationssystem für Deutschland). You enter your property address into the map. The system gives you a euro value per square meter for the land (Grund-und-Boden). You multiply this Bodenrichtwert by the total plot size (Grundstücksfläche). If you own an apartment, you multiply that result by your co-ownership share (Miteigentumsanteil). You find this fraction in your purchase contract or land register extract. This calculation gives you the total land value. You subtract this land value from your total purchase price to find the building share (Gebäudeanteil). The building share becomes your AfA basis. If the result looks heavily skewed against you, the Federal Ministry of Finance provides an official Excel tool (Kaufpreisaufteilung). This tool calculates a weighted split based on regional building costs and is generally accepted by the tax office.

10. Anschaffungskosten and Herstellungsaufwand basis rules

Your AfA basis is not just the raw property price. It includes Anschaffungskosten (acquisition costs). These are the mandatory fees you pay to buy the property. They include the notary fee (Notarkosten), land transfer tax (Grunderwerbsteuer), land registry fee, and broker commission (Maklerprovision). You must split these incidental costs using the exact same land-to-building ratio you calculated for the purchase price. Only the building portion of these fees goes into the AfA basis. You also need to track Herstellungsaufwand (manufacturing costs). If you renovate heavily within the first three years after purchase, §6 Abs. 1 Nr. 1a EStG applies the 15 % rule (Anschaffungsnaher Herstellungsaufwand). You must check if your net repair costs exceed 15 % of the initial building basis. If they do, you cannot deduct them immediately as Werbungskosten (deductible expenses). Instead, the Finanzamt classifies them as acquisition costs. You add them to your AfA basis and depreciate them slowly over 33 to 50 years.

11. Catching up on missed AfA

Many non-resident landlords miss filing their income tax return (Einkommensteuererklärung) in their first years of ownership. When you finally file, you might wonder if you can claim the missed depreciation (Nachholungs-AfA). German tax law requires you to apply AfA consistently every year. If a tax assessment (Steuerbescheid) for a past year is already final and past the one-month appeal period (Einspruchsfrist), you generally lose the AfA for that specific year. You cannot lump four years of missed AfA into your current tax return. The deduction for those years is permanently lost. However, your total AfA basis still decreases. The Finanzamt treats the missed years as if you had claimed the depreciation. Example: you bought a property four years ago and only file for the first time this year. You claim the standard 2.0 % for the current tax year. The 8.0 % from the four prior years is gone, but your remaining basis is 92 %. Always file on time to secure this deduction.

12. Component-level depreciation (Komponenten-AfA)

Standard AfA treats the building as a single asset with a 50-year life. A Federal Fiscal Court (Bundesfinanzhof) ruling allows landlords to use a shorter useful life if they can prove the building will not last 50 years. This requires a highly detailed and costly structural survey (Bausubstanzgutachten). Most non-resident landlords find the survey cost outweighs the tax benefit. Alternatively, some landlords attempt Komponenten-AfA. This method means splitting the building into separate parts like the roof, windows, and heating system. You then depreciate these parts over their individual, shorter lifespans. The Finanzamt routinely rejects this approach for standard residential property. Under current administrative guidelines, a residential building is a single uniform asset. You cannot separate the roof from the walls for tax purposes. You must stick to the standard §7 Abs. 4 EStG rates unless you own a specific commercial property and secure a binding tax ruling.

13. Actual tax saved across different brackets

AfA lowers your taxable rental income. Your actual cash savings depend on your marginal tax rate. Non-residents (beschränkte Steuerpflicht) do not get the tax-free allowance (Grundfreibetrag). Your first euro of German rental profit is taxed at 14 %, scaling up to 42 % or 45 %. Assume your annual AfA deduction is 6 000 €. You subtract this from your net rental profit. Your tax savings scale with your income bracket:

• At a 15 % tax bracket (low rental profit, no other German income): You save 900 € in income tax (6 000 × 0.15).
• At a 25 % tax bracket (moderate German income): You save 1 500 € (6 000 × 0.25).
• At the 42 % top bracket (high German income): You save 2 520 € (6 000 × 0.42).

14. Calculate your exact AfA schedule

You also save the 5.5 % Solidaritätszuschlag (solidarity surcharge) on your calculated income tax amount. The exact math changes based on your property's age, purchase price, and incidental costs. To see exact figures and calculate your own depreciation schedule, use our free AfA calculator at /tools/afa-calculator.