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Property Depreciation Calculator

Calculate the tax depreciation (AfA) for your rental property. Including depreciation rate, tax savings, and residual value projection.

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Annual Depreciation

$4,800.00

Depreciation Rate

2%

Depreciation Period

50 years

Tax Savings/Year

$2,016.00

Building Value
$240,000.00
Depreciation Rate
2%
Depreciation Period
50 years
Total Tax Savings
$100,800.00

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What Is Property Depreciation?

Property depreciation (AfA) allows owners of rented real estate to write off the acquisition cost of the building over its statutory useful life. The annual depreciation amount reduces taxable income and results in meaningful tax savings. The land portion is excluded from depreciation because land is considered non-depreciable. The AfA is one of the most significant tax advantages of owning rental property in Germany.

Depreciation Rates and Useful Life

The depreciation rate depends on the year the building was constructed. For new buildings completed from 2023 onward, an increased rate of 3 percent applies, corresponding to a useful life of approximately 33 years. Older buildings from 1925 onward are depreciated at 2 percent over 50 years. Buildings constructed before 1925 are depreciated at 2.5 percent over 40 years. In special cases, a shorter remaining useful life can be demonstrated through an expert appraisal, resulting in higher annual write-offs.

Determining the Land Portion

The land portion represents the share of the purchase price attributable to the land. Only the building portion can be depreciated for tax purposes. The split is typically based on official land value assessments from the local valuation committee. In sought-after city center locations, the land portion can reach 40 percent or more, while in rural areas it often falls below 15 percent. A realistic allocation is important because the tax authorities will not accept unrealistic assumptions.

Calculating Your Tax Savings

The actual tax savings depend on your personal marginal tax rate, which indicates how much tax you pay on the last euro earned. The annual depreciation reduces your taxable income, so you receive a tax refund equal to the depreciation amount multiplied by your marginal tax rate. With a marginal rate of 42 percent and annual depreciation of $6,000, you would save $2,520 in taxes per year. Over the entire depreciation period, these savings add up to a substantial amount that significantly improves the overall return on your investment property.

Frequently Asked Questions

AfA (Absetzung für Abnutzung) is the German term for depreciation. For rented properties, the acquisition cost of the building can be written off over its useful life for tax purposes. The land portion is not depreciable because land does not wear out. Depreciation reduces taxable income and results in annual tax savings.
For buildings completed after December 31, 2022, a depreciation rate of 3 percent applies (useful life of 33 years). For older buildings from 1925 onward, the rate is 2 percent (50 years). For buildings constructed before 1925, the rate is 2.5 percent (40 years). In exceptional cases, a shorter remaining useful life can be demonstrated through an expert appraisal.
The land portion is the share of the purchase price attributable to the land itself. Since land does not depreciate, this portion cannot be written off. The land portion is commonly estimated at 15 to 30 percent but can vary significantly depending on location and building density. In prime city center locations, it can exceed 40 percent.
No, regular depreciation only applies to rented properties. Owner-occupied residential property is not eligible for tax depreciation. Exceptions exist for listed buildings, where renovation costs may be partially tax-deductible even for owner-occupied properties.
When selling a rented property within the 10-year speculation period, the capital gain is taxable. The original purchase price is reduced by the depreciation already claimed, which increases the taxable gain. After the speculation period has expired, the sale is generally tax-free.

All calculations are for general informational purposes only. Not financial, tax, or legal advice. No guarantee of accuracy. Use at your own risk. Full disclaimer