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Ampel plans to extend the special depreciation allowance for residential buildings

On August 30, 2023, the Federal Cabinet passed the Growth Opportunities Act, which provides for an extension of the declining balance depreciation for residential buildings. The declining balance depreciation in residential construction, part of this law, has the potential to significantly strengthen the construction and real estate industry. People who start building within the next six years can benefit from the new AfA. In the first year, 6 percent of the investment costs can be claimed for tax purposes, followed by 6 percent of the residual value in each of the following years.

According to media reports, the traffic light coalition intends to retain the special depreciation allowance and also combine it with the declining balance depreciation allowance of six percent for six years (Section 7 (5a) EStG) for buildings with at least EH 55 planned in the Growth Opportunities Act. This combined depreciation would allow a total of eleven percent of the production costs of climate-friendly new buildings to be deducted from tax for six years.

Originally, the first program envisaged limiting construction costs to EUR 4,800 per square meter, but this is to be increased to EUR 5,200 per square meter in future. The new special depreciation scheme will not have any upper limits on construction costs.