Special depreciation for new rental housing expires at the end of 2021

December 7, 2021

Currently, the creation of new housing is subsidized by means of a special depreciation allowance. This amounts to up to 5% per year for the first four years and can be claimed in addition to the usual depreciation of 2% per year. This special depreciation is granted in terms of time if new, previously non-existent housing is created through construction measures on the basis of a building application submitted after August 31, 2018 and before January 1, 2022 or a building notification made during this period. Therefore, if building projects are currently planned and this special depreciation is to be used, it is mandatory that the building application is submitted or the building notification is made by 31.12.2021.

However, the other requirements for the special depreciation must be observed:

  • new living space must be created,
  • the acquisition or construction costs must not exceed €3,000 per square meter of living space, and
  • the dwelling must be used for residential purposes in the year of acquisition or construction and in the following nine years in return for payment; dwellings do not serve residential purposes if they are used for the temporary accommodation of persons.

Furthermore, the assessment basis for the special depreciation is limited to €2,000 per sqm of living space. On the other hand, it should be noted that the creation of new living space by converting a previously commercially used unit into a “new dwelling” or, for example, the first-time conversion of an attic into a dwelling is also eligible.

Recommendation for action: Whether the requirements for the special depreciation allowance can be met must be examined on an individual basis. In larger cities or in upscale residential construction, the construction costs will often exceed the limit of €3,000 per sqm. Otherwise, an attempt should be made to comply with the time limit by submitting the building application or the building notification by December 31, 2021.