AfAMax

Shorter Depreciation Period is Permitted

As the owner of a rented property, you do not have to be bound to the standard depreciation period of 40 or 50 years.

Courts have confirmed

Statutory right of choice (§ 7 para. 4 sentence 2 EStG).
Economic devaluation is sufficient — not just technical condition.
Private expert reports are admissible — court-appointed experts are not required for property valuations.
No obligation to provide a DIN-certified or structural condition report.
A plausible estimate is sufficient — mathematical precision is not required.
Tax authorities must accept well-founded appraisals without additional objections.
Legal Principles

What The Law & Courts Actually Require

Six legal pillars that determine how a shorter useful life can be proven.

The legal foundation: § 7 para. 4 sentence 2 EStG

In Germany, depreciation for rental property is usually calculated over a flat 40 or 50 years (2.5% or 2% annually).

The Income Tax Act expressly allows a shorter period if the actual economic useful life is shorter and this is demonstrated with a plausible expert assessment.

This is a legally guaranteed right of choice, not a special exception.

“If the actual economic useful life of a building is shorter than the periods resulting from the standard rates, depreciation corresponding to the actual shorter useful life may be applied.”

Section 7 (4) sentence 2 EStG

Actual useful life instead of a flat rate

Buildings do not age at the same rate. Construction type, floor plans, energy efficiency, modernization level, location, and marketability determine economic usability.

Courts accept credible estimates aimed at maximum probability rather than mathematical precision. As early as 1971, the Federal Finance Court ruled that mathematical precision cannot be required when determining the remaining useful life.

No obligation for special reports or procedures

A complex structural condition report (e.g. ERAB procedure) is not required to prove a shorter useful life.

Economic valuation approaches and market value appraisals can be sufficient if they are methodologically sound and comprehensible. The taxpayer may use any suitable method that allows for a comprehensible estimate.

  • ImmoWertV methods
  • Real value guideline / points model
  • Market value appraisal

Economic depreciation is sufficient

Courts clearly distinguish technical usability from economic usability. A building may still be technically sound but already economically obsolete.

Current case law expressly confirms that the economic consumption of a building can also justify a shorter remaining useful life.

  • Outdated floor plans
  • Lack of energy standards
  • Functional obsolescence
  • Limited rentability
  • Location or market changes

BMF letter 2023: guidance, not law

In 2023, the Federal Ministry of Finance published administrative guidelines recommending DIN certification, taking a critical view of market value appraisals, and limiting the purpose of appraisals.

Several tax courts have clarified that these requirements are not law, may not restrict the freedom of choice confirmed by the highest court, and the only decisive factor is whether the appraisal is technically convincing.

Courts follow case law — not restrictive administrative practice.

Estimates with a range are permissible

Determining the remaining useful life is always an estimate. Courts expressly do not require an exact number of years, but rather a realistic estimate within a plausible range.

An expert opinion may only be rejected if it is obviously implausible or clearly deviates from the recognized estimation framework. The tax office’s own counterarguments are not sufficient for this.

Investor Takeaways

Key Takeaways for Property Investors

Principles established by recent court rulings that guide tax assessments today.

Owners may choose standard depreciation or prove a shorter remaining useful life.

Tax offices cannot impose additional rules or requirements beyond the law.

Privately commissioned expert opinions are fully admissible when object-related, comprehensible, and methodologically sound.

DIN EN ISO/IEC 17024 certification of the appraiser is not a legal prerequisite.

ImmoWertV, real value guideline, and point models are recognized and permissible valuation methods.

No building fabric report (ERAB procedure) is required to prove a shorter useful life.

Economic depreciation alone can justify a shorter useful life — technical condition is not the only factor.

Estimates within a plausible range are permitted. Mathematical precision is not required, only maximum probability.

Tax offices must accept plausible expert opinions and may only reject those clearly outside the estimation range.

On-site inspections are not legally mandatory but significantly increase the credibility of an appraisal.

Even moderate reductions (e.g. from 50 to 45 years) lead to higher annual depreciation and are recognized by courts.

Case law is well-established and taxpayer-friendly. Many recent rulings were issued without appeal being allowed.

Case Law

Court Rulings That Shape Current Practice

Key judgments from the Federal Fiscal Court and lower tax courts confirming the rights of property owners.

AfAMax Method

The AfAMax Approach

We align strictly with current case law, not restrictive administrative practice.

Sound appraisals

Objectively sound, comprehensible expert opinions that meet the standards confirmed by recent court rulings.

Economic assessment

Full economic evaluation of your property considering location, condition, floor plans, energy standards, and marketability.

Legally secure derivation

Realistic, legally sound determination of remaining useful life that stands up to scrutiny from the tax office.

Start Your Property Valuation Today

Create a solid basis for increased depreciation with a certified remaining useful life report for tax purposes. Benefit from a simple online submission, expert review by certified appraisers, and a report that serves as a reliable basis for your tax return.

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In many cases, a valuation report leads to a noticeable reduction in annual tax burden.

300+ property owners across Germany have already optimized their depreciation with AfAMax.