Building Value (Gebäudewert)
The depreciable portion of your property
Building value (Gebäudewert) is the portion of your property's purchase price allocated to the structure itself, excluding land. This distinction is crucial because only the building can be depreciated with AfA.
Why It Matters
For tax purposes, Germany treats land and buildings differently:
- Building value: Depreciates at 2% annually (AfA) because structures wear out
- Land value: Cannot be depreciated because land doesn't "wear out"
How to Determine Building Value
There are several methods to split purchase price between building and land:
1. Purchase Agreement Method (Best)
If your notary contract explicitly splits building/land values, use those numbers.
2. Bodenrichtwert Method (Most Common)
Use official land values (Bodenrichtwert) from your municipality to calculate land value, remainder is building.
3. Sachwertverfahren (Appraisal)
Professional appraisal determining building replacement cost minus depreciation.
Typical Split: 70-85% Building
€450,000 Property Example:
- Purchase price:€450,000
- Building value (80%):€360,000
- Land value (20%):€90,000
- Annual AfA (2% of building):€7,200
Location Affects the Split
- City centers: Higher land value percentage (land is scarce)
- Rural areas: Higher building value percentage (land is cheap)
- New construction: Typically 85-90% building value
- Old buildings on prime land: Could be 50% land, 50% building
Related Terms
AfA(Absetzung für Abnutzung)
AfA (Absetzung für Abnutzung) is the German term for depreciation on investment properties. It allows you to deduct 2% of the building value from your taxable income each year for 50 years.
Land Value(Bodenwert)
Land value (Bodenwert) is the portion of your purchase price allocated to the land itself. Unlike buildings, land cannot be depreciated with AfA since it doesn't "wear out."
Purchase Price(Kaufpreis)
The purchase price (Kaufpreis) is the agreed price for the property. This amount is split between building value (depreciable) and land value (not depreciable) for tax purposes.