Tax
Depreciation Calculator (AfA)
Calculate the annual building depreciation (AfA) and estimated tax savings for rental properties.
- Last updated:
- Editorially reviewed
Inputs
Results
- Annual Depreciation
- €5.360
- Building Value (Depreciation Base)
- €268.000
- Monthly Depreciation
- €447
- Annual Tax Saving
- €2.251
- Total Tax Saving Over Useful Life
- €112.560
- Depreciation Period
- ~50 years
Run the numbers on a real property
With the address, size and price: financing, tax, cash flow and nearby comparable rents in one analysis.
Depreciation, known in Germany as Absetzung für Abnutzung (AfA), is a key tax instrument for property investors. It spreads the building's acquisition cost over its useful life and so reduces the tax on your rental income. Our depreciation calculator determines the annual write-off and the resulting tax saving.
How to Use This Calculator
The calculator separates the depreciable building portion from the non-depreciable land portion and derives your tax relief. Here's how to proceed:
- Step 1: Enter the purchase price of the property.
- Step 2: Enter the closing costs, as these proportionally increase the depreciation base.
- Step 3: Set the building share of the purchase price. The land portion is not depreciable. You can use the Federal Ministry of Finance's worksheet to split the price.
- Step 4: Choose the depreciation rate by year of completion: 2.5% before 1925, 2% from 1925 to 2022, 3% from 2023 (§ 7(4) EStG).
- Step 5: Enter your personal marginal tax rate to estimate the annual saving.
Understanding the Results
The calculation shows how much you can write off each year and how much this reduces your tax burden:
- Building Value (Depreciation Base): The depreciable portion of the purchase price and closing costs after deducting the land share.
- Annual Depreciation: The amount you can deduct from rental income as expenses each year.
- Monthly Depreciation: The annual depreciation broken down per month.
- Annual Tax Saving: The estimated reduction in your tax burden, calculated from the depreciation multiplied by your personal tax rate.
- Total Tax Saving Over Useful Life: The cumulative tax saving over the entire depreciation period, calculated from the annual saving multiplied by the number of years, assuming a constant tax rate.
- Depreciation Period: The number of years over which the building is fully depreciated.
Why Depreciation Matters for Investors
Depreciation is a non-cash expense: it reduces your tax burden without any money leaving your account in that year. This can substantially improve the net return of a rental property. An example: with a depreciation base of 240,000 euros and a 2% rate, you write off 4,800 euros per year. At a 42% tax rate, that is a tax saving of 2,016 euros per year, or 100,800 euros over 50 years at the same tax rate. Since only the building can be depreciated, a realistic and well-documented split between building and land is essential. The tax office follows an allocation in the purchase contract if it reflects the actual value ratios.
Frequently Asked Questions
What does AfA mean for real estate?
AfA stands for Absetzung für Abnutzung (deduction for wear and tear). It spreads a building's acquisition cost over its useful life and can be deducted annually from rental income as an expense for rented properties. The land portion is not depreciable, because land does not wear out.
What is the depreciation rate in Germany?
For buildings completed from 1925 to 2022, the straight-line depreciation rate is 2% per year over 50 years. For buildings completed before 1925, it is 2.5% over 40 years. For buildings completed from 2023, the rate was raised to 3%, corresponding to a depreciation period of about 33 years (§ 7(4) EStG).
How is the building share determined?
The purchase price is split according to the ratio of the market values of land and building. The tax office follows an allocation in the purchase contract if it reflects the actual value ratios, but it may review it. The Federal Ministry of Finance provides a worksheet for purchase price allocation that you can use to calculate your own split or to check a contractual split for plausibility.
These calculations are for informational purposes only. Consult a professional for financial advice.