New possibilities of depreciation
The new apportionment calculation of the total purchase price of developed properties can be profitable especially in urban areas.
When acquiring tax-relevant real estate assets, only the building portion can be used as the basis for tax-reducing depreciation.The land itself has no tax effect or tax relevance.
The calculation program previously used by the Federal Ministry of Finance was overturned by a ruling of the Federal Fiscal Court on the grounds that it did not lead to a clear-cut division between the building and the land.
The background to this was that the calculation tool could only calculate according to a single valuation method and in some cases did not take sufficient account of regional market developments. Especially in metropolitan areas, such as in the Rhine-Main area, the share of land can, due to the considerable price development, account for up to 70% of the total purchase price when using the “old” calculation tool. As a result, the building share decreases and thus also your tax depreciation possibility.
The new online apportionment tool of the Federal Ministry of Finance is now based on different valuation methods. This can lead to a more favorable result for your tax-relevant property than with the “old” method.
We control the future with you!
We will be happy to check for you whether a recalculation will lead to a better result and explain any new depreciation in your next tax return.
If you are thinking of buying a tax-relevant property, you can already include a division between the values of the building and the land in the purchase contract. However, please do not deviate too far from the valuation by the new calculation tool. We will be happy to assist you in this regard as well.
If you would like to have your property valued more individually, you can commission an expert or have it valued by the local courts here in Hesse. The local courts have the appropriate expertise and are a cost-effective alternative to individual property valuation particularly in the metropolitan areas of Hesse. Here, too, we would be happy to advise you in more detail.
For all questions concerning the new possibilities of the purchase price allocation of your real estate, our tax consultant, Mr. Jens Kunkel is at your disposal.