Save taxes with residual value appraisals for apartment buildings

Multi-family homes are an attractive capital investment - but with the return comes the tax burden. Many owners pay unnecessarily high taxes because they do not exploit the full potential of their depreciation allowances. A residual value appraisal can play a decisive role here. It enables a higher depreciation of the building value, which can significantly reduce the tax burden.

But how exactly does this work? When does a residual value appraisal make sense? And what financial benefits can owners derive from it? In this article, you will learn everything you need to know about this topic and how you can secure tax benefits.

1. What is a residual value appraisal?

A residual value appraisal determines the actual building value of a property, separately from the land value. This is important because in Germany only the building value can be depreciated, but not the value of the land. The problem is that the tax authorities often estimate too high a proportion for the land, which reduces the depreciable building proportion.

However, a professionally prepared residual value appraisal can prove that the actual building proportion is higher than estimated by the tax office - allowing owners to claim higher depreciation and save taxes.

2. Tax benefits of higher depreciation

2.1 Straight-line depreciation (AfA)

The standard depreciation rate for residential buildings is 2% per year over a useful life of 50 years. For buildings constructed before 1925, it is even 2.5% per year.

An example:

• Purchase price of an apartment building: €1,000.000

• Division according to the tax office: 60% land value, 40% building share

• Depreciation: 40% of €1,000,000 = €400,000 → 2% depreciation = €8,000 per year

However, if a residual value appraisal proves that the actual building share is higher, e.g. 80% building and 20% land, the depreciation would change as follows:

• Depreciation: 80% of €1,000,000 = €800,000 → 2% depreciation = €16,000 per year

Result: Double the depreciation and therefore considerable tax savings!

2.2 Special depreciation and tax optimization

In addition to straight-line depreciation, there are additional tax incentives for energy-efficient refurbishments and modernizations, which can be documented in more detail using an expert opinion. This allows owners to claim additional depreciation and further reduce their tax burden.

3. When is a residual value appraisal worthwhile?

A residual value appraisal is particularly useful if:

• The property valuation applied by the tax office is disproportionately high.

• The apartment building is already older and has high construction costs.

• A higher depreciation would be advantageous for tax purposes, especially for investors with high incomes.

• Planned renovations or modernizations require a new valuation.

In many cases, an independent residual value appraisal can achieve a more realistic distribution between building and property value, which improves depreciation opportunities.

4. Legal framework and acceptance by the tax office

Residual value appraisals must be prepared by qualified experts in order to be recognized by the tax office. A well-founded appraisal should:

• Realistically assess the structural conditions and construction costs.

• Be prepared on the basis of objective valuation methods.

• Refute the tax office assessment in a comprehensible manner if the assessed property value is too high.

Important: Not every tax office accepts a residual value appraisal without further ado. However, a professionally prepared appraisal based on recognized valuation methods can significantly increase your chances.

5. How owners can act now

If you own an apartment building and are wondering whether your depreciation options are being optimally utilized, now is the right time to check. A professional residual value appraisal can provide clarity and enable considerable tax savings.

5.1 Checking the option to sell

In addition to tax optimization, a revaluation of the property can also be useful if you are thinking about selling. Current market prices for apartment buildings are stable, and an optimal valuation can help you achieve the best price.

A professional estate agent can help you find the right strategy - whether it's a new rental with an optimized yield or a profitable sale.

Conclusion: Residual value appraisals as the key to tax optimization

A residual value appraisal can be a simple and effective way to save taxes by realistically valuing the building portion of an apartment building. Higher depreciation means lower tax burdens and a better return for owners.

Use this opportunity to optimize your tax strategy!

📊 As a DEKRA-certified appraiser, I have the expertise to accurately analyze the market and value potential of your apartment building. If you are thinking about selling your property, I will guide you professionally through the entire marketing process.

💡 Let's get the best out of your property together! Contact us for a no-obligation consultation.

👉 Arrange a consultation now

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Note: This article is for general information purposes only and does not constitute tax or legal advice. Please seek advice on tax issues from a tax advisor or a specialist. Liability for the accuracy and completeness of the information is excluded.