Tax advantages for property owners – State funding for affordable housing

Investors who create new housing should be supported by the state. The law is intended to create incentives for the construction and construction of affordable real estate.

With a tax bonus, the government aims to motivate German homeowners and investors to create affordable housing. It is not only the new building promoted, but also the expansion of attics and the conversion of industrial buildings into housing. The tax subsidy is part of the “Housing Offensive” of the Federal Government. The goal is to relax the tense housing market in the coming years with up to 1.5 million new apartments.

Owners can thus claim special depreciation for new buildings, four years from the date of the investment. Up to 5 percent of the acquisition and production costs can therefore be deducted for tax purposes. As a result, owners can save up to 28 percent of the capital invested in tax terms.

In order to ensure that affordable housing and luxury apartments are not promoted, the full tax rates only apply to living spaces that are calculated at a maximum of € 2,000 per square meter. If € 3,000 per square meter is exceeded, government funding is completely excluded.

In order to benefit from tax write-offs, investors must submit an application for new residential construction from 31 August 2018 and no later than 1 January 2022. Another condition is the long-term letting of the property. The law stipulates that the beneficiary flats must serve residential purposes for at least ten years after the purchase or production of the pecuniary lease.
In addition, the living space must be at least 23 square meters, apartments are excluded.

The federal government can cost a lot: with 235 million euros less tax revenue per year is expected. The tax bills expire in 2026, so that builders complete the new rental properties by 2023 at the latest. So investors should be moved to swift action.