Note: The following article is for general guidance only. For binding advice, we strongly recommend that you consult an expert. We will be happy to put you in touch with the right experts in our region.
Change in the law for landlords regarding the remaining useful life of their property
What is the remaining useful life:
- 6 para. VI ImmoWertV:
The remaining useful life is the number of years in which a building is expected to remain economically usable if properly managed.
Pursuant to Section 7 (4) sentence 2 EStG, a building may be the actual useful life be amortised. If the actual useful life is less than the statutory useful life, the taxpayer must provide evidence of this.
For experienced owners who let professionally, it's clear: they let now have the actual remaining useful life confirmed by a market value broker or an expert. This appraisal reflects the current market value of a property, i.e. the condition of the buildings, the location, fixtures and fittings and the current situation on the property market/demand. In other words, a sales value is determined that can currently be achieved for the property.
Information on the change in the law
The following sentence is important:
"Here, the legislator is implementing a significant increase in property valuation, as the total useful life is to be increased from 70 to 80 years (Annex 22 BewG-E). This also increases the respective remaining useful life of a property and increases its value."
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As a private landlord, you should listen carefully.
Why are the professionals having the remaining useful life confirmed with an expert opinion right now?
The following: The tax office previously set the "remaining useful life" of a property at a flat rate of 50 years or 40 years for buildings constructed before 1925. At 50 years, that is 2 % per year that your house or flat loses value for accounting purposes. If the house cost €100,000, you can therefore claim €2,000 per year as tax deductible costs.
Almost all properties have an actual remaining useful life of far less than 50 years. Which heating system, facade, electrics or roof will last 50 years?
In order to be able to claim higher depreciation, you need proof that the remaining useful life is actually shorter. As the owner, you must provide this proof of the shorter useful life. If you submit an expert opinion on a remaining useful life of 33 years instead of 50 years, for example, the depreciation can be increased from 2 to 3 %. With a building value of €100,000, you can therefore claim around €3,000 per year as tax deductible costs. The tax advantages and the liquidity gain can therefore be significant.
Use the expert opinion for tax advantages and liquidity gains.
Information under: https://www.haufe.de/steuern/rechtsprechung/wertgutachten-kuerzere-restnutzungsdauer-eines-gebaeudes_166_563316.html
Residual value appraisals - competent support for your property valuation
In the case of property projects or sales decisions, it can be important to Residual value of a property precisely. A well-founded residual value appraisal provides clarity about the current value of a property or plot of land, taking into account the condition of the building, the remaining useful life and the market situation.
Our expert for residual value appraisals
Our managing director Andreas Müller is a certified Sprengnetter market value appraiser and has extensive experience in property valuations. Whether it is the valuation of existing properties, the comparison of residual values in refurbishment projects or the sale of properties - Andreas Müller is at your side as a competent partner.
"The legislator will probably soon make it more difficult for property owners to change the actual useful life of the property with expert opinions. That's why the professionals are already taking action. You should do the same."
Energy-efficient refurbishment of buildings is very important in the face of climate change. Older properties in particular often require energy efficiency improvements. Tenants rightly expect future-proof living space. Targeted energy efficiency measures help to minimise energy consumption for heating, hot water and ventilation. As a landlord, you therefore need to take action and renovate.
Here is a very simplified explanation of what this means for you in concrete terms:
As an owner, you have to invest. If you modernise, you need money and adjusted depreciation. If you invest in - for example - a new heating system or a new roof within 3 years of purchase, this is amortised over 50 years together with the purchase price. If you invest after the 3 years, it will be depreciated much faster, depending on the trade. Especially in the current market situation, we all know that cash flow is important in order to have capital for the renovation and modernisation of your property.
Implementing these measures will increase the value and lifespan of your property, even if the investment initially seems high.
