Heritage protection for real estate – important things you should know
To take advantage of depreciation due to monument protection, the property must meet certain requirements. These include:
- Historical significance: Did a special event take place in this building or did an important personality once live here?
- Artistic significance: Is the building exemplary of a particular artistic genre? Were well-known architects or artists involved in its design?
- Scientific significance: Is there a scientific interest in the building? Do relevant publications exist about the building?
- Urban planning significance: Does the building exist in a special urban space?
The interpretation of these criteria varies considerably from state to state. Whether a certain building fulfils the above requirements is ultimately decided by the local office for the protection of historical monuments. In Berlin, all monuments are included in a wide-ranging list for information purposes. This means that the heritage protection authority determines the heritage status of a place, justifies it and then includes the place in the updated list of monuments and protected properties. Once the legally protected status has been established, you as the owner can take advantage of numerous tax benefits.
There is a lot to consider here. In order to enjoy the full benefits, it is important to work closely with the authorities during the construction. If, for example, you install modern plastic window frames instead of the recommended wooden window frames, you cannot claim these costs. This is where GLINT’s team of experts can help you. As your personal advisors, they will ensure that all guidelines for the protection of historical monuments are complied with in order to take full advantage of the write-off advantages.
It is also important to comply with application deadlines. Owners who first take care of the building permit and then of the preliminary tax certificate may jeopardize tax advantages. The authority is not allowed to issue any certificates after the start of the renovation and without the certificate no write-off is possible. Here too, owners of a GLINT apartment have an advantage because the entire administrative process is carried out by a competent team of consultants.
The heritage protection of AfA and GLINT
The reason why you benefit from GLINT’s significant tax advantages is the so-called AfA (short for deduction of wear and tear). This legal guideline defines how the state creates incentives for the preservation and modernisation of monuments through cost write-off possibilities.
Very important: The AfA for monuments stipulates that the highest write-off is possible only before the start of construction. Therefore, buyers who make an early decision benefit from the highest tax-advantage percentages. After the start of construction, the tax-privileged portion of the acquisition costs is reduced according to the progress of construction. When the building is completed, the tax advantage is completely eliminated.
Since the revitalisation of GLINT has already begun and the first protection and demolition measures are being carried out, a short-term purchase is recommended. This is the only way to ensure that tax advantages can be used optimally. Therefore, the purchase of a unit in the old buildings of GLINT is particularly worthwhile. The assessment procedure of the increased write-off for protected buildings is currently being conducted. As part of an initial forecast by Mazars GmbH & Co. KG Steuerberatungsgesellschaft, a tax-privileged portion of the acquisition costs of up to 25%* is expected for the old building units of GLINT. Currently, the concrete value for each unit is determined in detail on the basis of the preliminary decision.
Owner vs. investor
Buyers benefit from tax write-offs after completion of the construction project. Only then can the purchase price allocation be determined by the tax authorities in proportion to the actual production costs.
It is important to pay attention to the tax differences between owner-occupiers and investors. The following applies to owner-occupiers: If you live in the property yourself after the renovation, you can claim tax relief in accordance with § 10f EStG. This means that up to 9% can be deducted as special expenses in the calendar year in which the construction project is completed and for the duration of the following nine calendar years.
A purchase also pays off for investors. If you rent out your property or use it for your own business purposes, you can take advantage of the tax relief according to § 7i EStG. This means that up to 9% of the acquisition costs can be deducted in the year of construction and in the following seven years and up to 7% in the following four years.