Building renovation; application for a certificate for tax purposes

The cost of maintaining and repairing buildings in designated redevelopment areas or urban development areas can be significantly reduced in some cases through tax concessions.

In order to claim tax concessions for modernization and repair measures within redevelopment areas and urban development areas, a certificate from the municipality must be submitted to the tax authorities.

This certificate is issued by the responsible municipality upon application. Members of the tax advisory professions can provide comprehensive advice on the details of possible tax concessions.

Measures that lead to the construction of a new building are not subject to tax relief.

Production costs for (construction) measures as well as subsidies from renovation or development funds must be stated in the application.

The production costs for modernization and repair measures, less any subsidies, can be deducted up to 9% in the year of production and in the following seven years, and up to 7% in the following four years.

For properties used to generate income, maintenance costs can be deducted over two to five years instead of in one year if the taxpayer so wishes. In the case of owner-occupied properties, the production costs can alternatively be deducted as special expenses at 9% for ten years.

The certificate can only be issued for modernization and repair measures within defined redevelopment areas and urban development areas.

Before construction work begins, the redevelopment area or urban development area must have been formally defined and a modernization or repair order must have been issued by the municipality or a written agreement on the modernization or repair order must have been concluded between the owner and the municipality. If individual construction measures have already been carried out beforehand, a certificate cannot be issued.

• Plans inventory
• Plans with entry of the measures
• Modernization or repair requirement or agreement
• Original invoices (final invoices)

25 to 600 EUR

• § Section 7h of the Income Tax Act (EStG)
• § Section 10f of the Income Tax Act (EStG)
• § Section 11b of the Income Tax Act (EStG)
• Certification guidelines for the application of Sections 7h, 10f and 11a of the Income Tax Act (EStG-BeschR Sections 7h, 10f and 11a)
• Tariff No. 4.I.1 Ordinance on the Enactment of the Schedule of Costs under the Costs Act (Kostenverzeichnis - KVz-)

Administrative court action

• Sample application for a certificate in accordance with Sections 7h, 10f, 11a of the Income Tax Act (EStG)

The certificate must be applied for at the responsible municipality.

As part of the certification procedure, the responsible municipality checks whether the building is located in a formally defined redevelopment area or urban development area, whether modernization and repair measures have been carried out, the amount of expenses incurred and the extent to which grants from public funds have been approved.

The certificate issued by the municipality is used for submission to the responsible tax authority for checking the tax depreciation.