Tax Benefits
What We’ve Learned About Tax Benefits
Investing in a heritage-listed (Denkmal) property in Germany comes with significant tax benefits. The government provides tax incentives to encourage the preservation of historic buildings, allowing investors to reduce their taxable income while restoring valuable real estate assets.
Key Tax Deductions for Denkmal Properties
7i EStG – Special Depreciation for Rental Properties
If you buy and rent out a Denkmal property, you can deduct 100% of the renovation costs over 12 years:
This accelerated depreciation significantly reduces taxable rental income, making the investment highly tax-efficient.
10f EStG – Tax Deduction for Owner-Occupied Properties
If you live in the Denkmal property, you can deduct 90% of renovation costs over 10 years:
This is one of the few cases where private homeowners can claim tax deductions for renovations.
Depreciation for Wear and Tear (AfA)
In addition to the Denkmal-specific tax deductions, investors can also claim regular depreciation (AfA – Absetzung für Abnutzung) on the purchase price of the building.
The depreciation rates are:
This allows investors to further reduce taxable income beyond just the renovation deductions, increasing long-term tax efficiency.
Deducting Mortgage Interest Payments
If you finance your Denkmal property through a loan, the interest payments on the mortgage are tax-deductible.
This applies to rental properties, where interest expenses reduce taxable rental income, further optimizing cash flow.
The combination of mortgage interest deductions, renovation depreciation, and AfA provides a powerful tax strategy for high-income investors.
Sell After 10 Years Tax-Free Capital Gains
In Germany, if you hold a property for at least 10 years, you can sell it without paying capital gains tax (regardless of appreciation value). • This means that any profit you make from the property’s increase in value is 100% tax-free. • Combined with the tax deductions during ownership, this makes Denkmal properties one of the most profitable long-term real estate investments.
Legal Requirements for Tax Deductions
Financial Impact & Investment Benefits
- Denkmal tax deductions drastically reduce taxable income, leading to substantial tax savings.
- For rental properties, benefits combine with standard real estate depreciation (AfA) and mortgage interest deductions to optimize cash flow.
- Selling after 10 years with 0% capital gains tax further increases long-term profitability.
- High earners can recoup 40–45% of renovation costs through tax reductions, making Denkmal properties a smart financial and cultural investment.
By leveraging these tax incentives, Denkmal investors can maximize returns while preserving historical properties. With Klar Denkmal, you gain access to our own properties and expert guidance to optimize your tax savings and investment success.
