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

3.0 % per year for buildings completed from 1 January 2023 (§7 Abs. 4 Nr. 2a). 2.0 % for buildings completed from 1925 through 2022 (letter b). 2.5 % for buildings completed before 1925 (letter c). These are the standard linear rates; special cases need separate verification.

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, acquired on 1 July. Assume the purchase contract and supporting valuation justify an 80 % building share; 80 % is an input to this example, not a general default. Building basis: 336 000 €. The §7 Abs. 4 Nr. 2b rate is 2 %, so full-year AfA is 6 720 € and the six-month acquisition-year amount is 3 360 €.

7. Sonder-AfA and other special schemes

Sonder-AfA under §7b EStG is a separate regime for qualifying new rental housing, with date, use and cost conditions. For building applications made after 31 December 2022, the energy condition is Effizienzhaus 40 with Nachhaltigkeits-Klasse, proven by the Qualitätssiegel Nachhaltiges Gebäude (QNG). Do not infer eligibility from an EH55 label or from the standard 3 % rate.

8. What to write where

On Anlage V 2025, the standard linear building AfA goes into Zeile 33. Keep the documented building basis and calculation trail with your records. Anlage V Easy prepares the 2025 tax-year amount and Zeile mapping; it does not promise a multi-year depreciation register.

9. Use BORIS-D as an input, not a residual method

BORIS-D provides the relevant Bodenrichtwert, one input to the land valuation. Do not subtract a calculated land value from the total purchase price and call the remainder the building value: the BMF guidance rejects that Restwertmethode. Determine the separate market values of land and building as if each were sold independently, then allocate the total purchase price in the ratio of those values. The BMF Kaufpreisaufteilung work aid produces a qualified estimate from the declared inputs; it is not an automatic acceptance certificate. A contractual split can be used when it reflects the real economic values, and a substantiated expert valuation can rebut an estimate. Keep the contract, co-ownership share, plot and living areas, construction details, Bodenrichtwert source and work-aid version with the calculation.

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. Check the tax-year calculation

Use the free AfA calculator to check a full-year amount and the acquisition-year whole-month pro rata. It is an exploratory calculation from the inputs you provide, not a multi-year schedule and not proof that the entered land/building split is accepted.