AfA (Absetzung für Abnutzung)
Building Depreciation. The annual tax write-off on a rental building's value (never the land): 2% for buildings completed 1925–2022, 2.5% pre-1925, 3% from 2023: plus a 5% degressive option for new projects started 10/2023–09/2029.
AfA turns paper depreciation into real tax savings: it reduces taxable rental income every year without costing cash. On a €400,000 apartment with €320,000 building share completed in 2024, 3% AfA deducts €9,600 annually.
The degressive 5% option (Wachstumschancengesetz, § 7 Abs. 5a EStG) front-loads deductions in the high-interest early years and can be combined with the § 7b special depreciation for efficient new builds (EH40/QNG). Switching from degressive to linear later is allowed.
Frequently asked questions
What is AfA depreciation in Germany?
The annual tax write-off on a rental building's value under § 7 EStG. It reduces taxable rental income every year without costing any cash. The land share is never depreciable, only the building.
How much can I depreciate on a German rental property?
2% per year for buildings completed 1925 to 2022, 2.5% for pre-1925 buildings, and 3% from 2023 onwards. New projects started between 10/2023 and 09/2029 can instead elect 5% degressive depreciation.
Can I claim AfA on a home I live in myself?
No. AfA requires rental income or business use. Owner-occupiers cannot deduct building depreciation at all, which is one reason the German tax system favours letting over self-use for investors.
How is the building share separated from the land share?
Through the purchase price allocation: commonly the Federal Finance Ministry worksheet, an expert valuation, or a realistic split written into the purchase contract. The higher the recognised building share, the higher your annual depreciation.
Does depreciation increase my tax bill when I sell?
Within the ten-year speculation period, yes. Depreciation already claimed reduces your acquisition cost, so the taxable gain is correspondingly larger. After ten years the sale is tax-free and it no longer matters.