AfA Guide · Edition 1 · 2026
Save tax with new-build property.
Depreciating means that every year you deduct part of the building's value from your taxable income, without any money going out. There are three routes for this: two under § 7 EStG (German Income Tax Act) and the special depreciation under § 7b EStG. This guide shows all three, sets out the calculations openly and tells you what you need to ask for before you buy.
At a glance
Three ways to lower your tax bill.
Hardly anything else shows its benefit as quickly as depreciation.
Since the Growth Opportunities Act (Wachstumschancengesetz), a new build has been in a better tax position than at any time since the 1990s. Declining-balance depreciation is back, which lets you deduct more in the early years than later. The special depreciation for climate-friendly rental flats continues. And you may use both together.
This is exactly where most calculations go wrong. Which area counts towards the cost limit? What amount is the special depreciation really calculated on? And when is it worth switching to straight-line depreciation?
This guide answers these questions so that you can put the right papers in front of your tax adviser and compare offers yourself.
What this guide contains
| 1 | How depreciation works for property | p. 3 |
| 2 | Route 1: the same amount every year (3%) | p. 4 |
| 3 | Route 2: a lot at the start, less later (5% of the residual value) | p. 5 |
| 4 | Route 3: the special depreciation under § 7b EStG | p. 6 |
| 5 | The cost limit, and which area counts | p. 7 |
| 6 | The big worked example: €155,141 in four years | p. 8 |
| 7 | What ends up staying in your account | p. 9 |
| 8 | The plan over 10 years | p. 10 |
| 9 | Checklist and the five most common mistakes | p. 11 |
| 10 | Sources, legal position and your next step | p. 12 |
1 · Basics
How depreciation works for property.
A building wears out. Tax law therefore allows you to deduct part of the building's value from your income every year. The technical term is Absetzung für Abnutzung, AfA for short (tax depreciation). The nice part: no money goes out, yet you pay less tax. And the flat itself can gain in value in the same year.
What matters is the basis of the calculation: You may only depreciate the building, never the land beneath it. The purchase price is therefore split. The larger the share attributed to the building, the more you can deduct each year.
This is how the purchase price is split in the example used in this guide (purchase price €578,045). You may only depreciate the building share. The split belongs in the purchase contract. For new builds on a small plot, a high building share of around 85% is easy to justify.
The three routes at a glance
| Route | how much per year | what is required |
|---|---|---|
| The same every year (§ 7 para. 4 EStG) | 3%, always the same amount | completed from 2023 onwards and let |
| More at the start, less later (§ 7 para. 5a EStG) | 5% of the remainder not yet depreciated | Construction started between 10/2023 and 09/2029 |
| Special depreciation (§ 7b EStG) | an additional 5%, in years 1 to 4 | Efficiency House 40 with QNG seal, cost limit met, let for 10 years |
2 · Instrument 1
Route 1: the same amount every year.
This is the standard case. For residential buildings completed on or after 01/01/2023, it is 3% a year (§ 7 para. 4 EStG). The same amount every year, with no further conditions. This is what you calculate with first.
Who this route is right for
- You want to calculate with a fixed figure over decades rather than deducting a lot at the start and little later.
- You pay little tax today but expect to earn more. Then every euro deducted in ten years' time is worth more than it is today.
- As a fallback: if you start with the declining route, you may switch to this one later (chapter 3). It does not work the other way round.
3 · Instrument 2
Route 2: more at the start, when you need it.
The Growth Opportunities Act brought back declining-balance depreciation (§ 7 para. 5a EStG). It amounts to 5% of the value not yet depreciated. Because this remainder gets smaller every year, the amount falls too. Construction must have begun between 01/10/2023 and 30/09/2029. If you buy from a developer, you must buy by the end of the year in which the building is completed.
The advantage: in the first years you deduct considerably more than with the straight-line route. Precisely when interest and initial costs are at their highest.
The two routes compared (building value €491,338)
| Year | declining (5% of remainder) | straight-line (3%) | Advantage of the declining route |
|---|---|---|---|
| Year 1 | €24,567 | €14,740 | +€9,827 |
| Year 2 | €23,339 | €14,740 | +€8,599 |
| Year 3 | €22,172 | €14,740 | +€7,432 |
| Year 4 | €21,063 | €14,740 | +€6,323 |
| Year 5 | €20,010 | €14,740 | +€5,270 |
| Year 10 | €15,483 | €14,740 | +€743 |
Calculated with full years. In the year of purchase, only the part from the month of purchase counts. Our own calculation under § 7 para. 5a EStG, rounded to whole euros.
4 · Instrument 3
Route 3: the special depreciation under § 7b EStG.
For climate-friendly rental flats, the state adds something extra: an additional 5% a year, in the first four years. This comes on top of route 1 or route 2; § 7b para. 1 EStG expressly allows this. Together with the declining route, around 10% a year is possible at the start.
Four conditions must be met
| Condition | What it means |
|---|---|
| 1 · The building saves energy and has the seal | It must be an Efficiency House 40 with the QNG sustainability seal. The seal is only issued once the building is completed. Before that, get the developer to confirm in writing that it will be issued. |
| 2 · The building permit application falls within the right period | The building permit application or building notification must have been submitted after 31/12/2022 and before 01/10/2029. That is what § 7b para. 2 EStG says as amended by the Growth Opportunities Act, as of July 2026. Have your tax adviser confirm this for your case. |
| 3 · The building was not too expensive | The building may have cost at most €5,200 per square metre. Which area counts is explained in chapter 5. That is where most people make the mistake. |
| 4 · You let for ten years | The flat must be occupied by a paying tenant for ten years. If you move in yourself or sell before then, the tax office will take the special depreciation back retrospectively. |
If you buy from a developer
- You must buy by the end of the year in which the building is completed. If you get in early, you are on the safe side.
- The special depreciation runs alongside the normal depreciation and ends automatically after four years.
- Only flats qualify. Shops or offices in the same building do not count.
5 · The most common misconception
The cost limit: which area really counts.
“€5,200 per square metre, surely every new build in Berlin is above that.” The thought is an obvious one and is usually wrong. According to the letter from the Federal Ministry of Finance dated 21/05/2025, the limit is not calculated on the living space of your flat.
It is calculated on the total usable area of the building including ancillary rooms, i.e. also cellars, plant rooms and bicycle rooms, pro rata according to your share of the building. Alternatively, you may even use the gross floor area under DIN 277, in which all storey areas count. This usually turns out even larger, which lowers the price per square metre.
The same flat, three ways of calculating (building share €491,338)
The limit is €5,200 per m². Living space only: limit exceeded, no special depreciation · Usable area including ancillary rooms: just fits · Gross floor area: fits comfortably. * The conversion factors are empirical values for multi-family buildings with a cellar and communal areas. What applies to your building must be proven by the developer (letter from the Federal Ministry of Finance dated 21/05/2025, marginal numbers 49 to 51).
What this means in practice
- Do not cross expensive projects off your list too early. Ask for the developer's area and cost calculation.
- The limit has no in-between. One euro over means no special depreciation, none at all. That is why the proof has to come before your decision, not after it.
- You may only choose between the areas for this limit. The basis for calculating the special depreciation (€4,000/m²) still depends on the living space of your flat.
6 · The big worked example
€155,141 in four years, calculated step by step.
A fictitious example: new-build flat with 80 m² of living space, purchase price €578,045, of which 85% is attributed to the building (€491,338), Efficiency House 40 with QNG seal, all conditions met. This is how the declining route and the special depreciation add up:
Total per year from two parts: the declining route with 5% of the remainder and the special depreciation under § 7b. The latter brings €16,000 a year, calculated on the maximum basis of €320,000.
| declining route | Special depreciation § 7b | total | |
|---|---|---|---|
| Years 1 to 4 | €91,141 | €64,000 | €155,141 |
| Share of building value | 18.5% | 13.0% | 31.6% in four years |
Fictitious example without guarantee, calculated with full years. In the year of purchase, only the part from the month of purchase counts. From year 5, the declining route continues (€20,010 in year 5), and the special depreciation ends as planned. What you end up with depends on your tax situation. Have it checked by your tax adviser.
7 · Net view
What stays in your account.
Every euro you depreciate lowers your taxable income. How much tax you save as a result depends on the percentage you pay on the top part of your income. What the €155,141 in the example becomes, depending on your tax rate:
Saving = €155,141 times your tax rate on the top part of your income, rounded. Not including the solidarity surcharge and church tax, which come on top.
What this means per month
At a tax rate of 42%, you pay around €65,200 less tax over four years. That is a good €1,350 a month to help with the loan repayment. And precisely at the start, when interest and additional costs are at their highest.
You can also deduct these, and many people forget to
- Interest during construction: You can deduct it from the purchase contract onwards, even if the building is not yet standing and no rent is coming in yet.
- The cost of having the land charge (Grundschuld) registered for the bank, plus other ancillary loan costs: deductible immediately.
- Running costs that you may not pass on to the tenant, such as property management or your share of the reserve fund once it is actually spent: deductible on an ongoing basis.
- The additional purchase costs attributable to the building, i.e. a pro rata share of notary, land registry and real estate transfer tax (Grunderwerbsteuer): they increase the amount you may depreciate.
8 · The roadmap
The plan over 10 years.
The three routes only deliver their full effect in combination and over the years. This is what the usual sequence looks like:
| Stage | What happens |
|---|---|
| On purchase | You can already deduct interest during construction. You submit the KfW application (programme 297, climate-friendly new build) before signing at the notary. |
| On handover | Depreciation now begins, in the first year only for the months from handover. When a new build is let for the first time, the rent cap (Mietpreisbremse) does not apply. |
| Years 1 to 4 | The strongest years: declining route plus § 7b, together up to around 10% a year, €155,141 in the example. |
| After a good ten years | You switch once to the straight-line route as soon as it brings more. Your tax adviser will work out the timing. |
| After year 10 | You can now sell tax-free as a private individual, because the ten years are up (§ 23 EStG). |
9 · In practice
What you need before you buy, and the five most common mistakes.
These papers should be on the table before you sign
- The area and cost calculation for the cost limit, i.e. usable area or gross floor area under DIN 277 per flat, including your share of the common property
- The split of the purchase price into land and building, as stated in the draft contract, and how the parking space is treated
- The date of the building permit application or building notification (for § 7b: 2023 to 09/2029) and the start of construction (for the declining route: 10/2023 to 09/2029)
- Proof of Efficiency House 40 and the written commitment for the QNG seal; the final seal comes after completion
- Confirmation of the year in which the building will be completed, because you must buy by the end of that year
- The terms of KfW programme 297 checked and the application submitted before you sign at the notary
- Your own tax adviser has worked through your tax rate, the offsetting of losses and a ten-year plan
The five most common mistakes
| Mistake | What it costs and how to avoid it |
|---|---|
| 1 · Calculating the special depreciation on the whole purchase price | The result is tens of thousands of euros too high. Always calculate with at most €4,000 per m² of living space. |
| 2 · Calculating the cost limit on the living space | You rule out good properties that actually qualify. Ask for proof of the usable area or gross floor area (chapter 5). |
| 3 · Submitting the KfW application only after the notary appointment | The funding is lost. The application must go in before you sign. |
| 4 · Selling or moving in yourself before year 10 | The tax office takes back the special depreciation retrospectively, and the profit becomes taxable. Plan for the ten years from the outset. |
| 5 · Believing depreciation promises without paperwork | A promise in an advert is not proof. The list above protects you. Anyone reputable will provide all of it. |
10 · Sources and legal position
Where the statements come from.
This guide is based on the Income Tax Act (Einkommensteuergesetz) and the letter from the Federal Ministry of Finance on the special depreciation. We disclose every calculation and name every limit.
| Statement | Source | As of |
|---|---|---|
| Straight-line depreciation of 3% for new builds from 2023 | § 7 para. 4 EStG | July 2026 |
| Declining-balance depreciation of 5% of the remainder, construction start 10/2023 to 09/2029 | § 7 para. 5a EStG (Growth Opportunities Act) | July 2026 |
| Special depreciation, conditions, calculation basis at most €4,000/m², cost limit €5,200/m² | § 7b EStG; letter from the Federal Ministry of Finance dated 21/05/2025 | July 2026 |
| Tax-free sale after ten years | § 23 EStG | July 2026 |
All calculations are fictitious examples without guarantee, rounded to whole euros. This guide provides general information on the legal position in July 2026. It does not replace tax or legal advice. Your tax adviser will check what applies to you. Laws may change after the editorial deadline.
Your next step
The calculation for the unit you want.
For our new-build properties, we obtain the developer's documents you need for depreciation and work through the numbers for the flat you want. Free of charge and without obligation. We have been supporting investors in Berlin and Brandenburg for around 30 years, today from Kurfürstendamm, as part of NAI apollo.
BBI Immobilien · Kurfürstendamm 178-179, 10707 Berlin · Phone +49 30 327 734 0 · info@bbi-immobilien.de
AfA Guide 2026, content as of July 2026. All information without guarantee, no tax, legal or investment advice.