How does the depreciation for wear and tear (AfA) work for real estate?
May 30, 2022 | 50,00 EUR | answered by Christine Witzelmann
Dear tax advisor,
my name is Fred Ehrig and I am the owner of a rented property. In the past, I have already benefited from the possibility of depreciation on my property, but I still have some uncertainties regarding the depreciation for wear and tear (AfA). I would like to understand how exactly AfA works for properties and how I can correctly include it in my tax return.
The current situation is as follows: I have been successfully renting out my property for several years and have regular income from rental payments. So far, I have used AfA to reduce my tax burden, but I want to make sure that I am doing everything correctly and do not have any errors in my tax return.
My concerns are that maybe I am not taking advantage of all the possibilities of AfA or that I am doing something wrong, which could lead to issues with the tax office. That is why I would like a detailed explanation of how AfA works for properties and how I can best report it in my tax return.
Therefore, my question to you is: Can you please explain to me in detail how depreciation for wear and tear (AfA) works for properties and what specific steps I need to take to correctly report it in my tax return? Are there any specific deadlines or requirements that I need to be aware of? I want to make sure that I fully utilize all the possibilities of AfA and avoid making any mistakes.
Thank you in advance for your help.
Sincerely,
Fred Ehrig
Dear Mr. Ehrig,
Thank you for your question regarding depreciation (AfA) for rented properties. I would like to provide you with a detailed explanation so that you can better understand how AfA works and how to correctly report it in your tax return.
Depreciation (AfA) is a way for landlords to deduct the acquisition or production costs of their rented property over a certain period for tax purposes. AfA is used to account for the decrease in value of the property due to its use. In your case as a landlord of residential housing, AfA is typically depreciated linearly over a period of 50 years, meaning the value of the property is reduced by the same amount each year.
To report AfA in your tax return, you need to know the acquisition or production costs of your property. This includes the purchase price, notary fees, real estate transfer tax, as well as costs for renovation or modernization work. These costs are spread over the useful life of the property and claimed as AfA in your tax return each year.
It is important to calculate and report AfA correctly to avoid any issues with the tax authorities. Make sure to include all costs that can be used to calculate AfA and report it regularly in your tax return without missing any deadlines.
It is recommended to report AfA in your tax return using Annex V (Income from renting and leasing). There, you can specify the acquisition or production costs of your property as well as the annual AfA. It is also possible to submit AfA electronically via Elster or other tax software.
In summary, AfA is an important way for landlords to reduce their tax burden. By accurately calculating and reporting AfA in your tax return, you can ensure that you are taking advantage of all tax benefits and avoid any issues with the tax authorities.
I hope my explanation helps you understand how AfA works for properties. If you have any further questions, please feel free to contact me.
Best regards,
Christine Witzelmann
