If you own or are thinking about buying a rental property in Germany, you will run into one term very quickly: AfA. And if you are talking to a developer or agent selling a new build, you will likely hear a number like "eight percent depreciation per year" — sometimes even ten. This article explains what that actually means, how the different rules work, and what questions to ask before you sign.
What is AfA and why does it matter?
AfA stands for Absetzung für Abnutzung — literally "deduction for wear." The principle: a building loses value over time. The German tax authority recognises this and allows you to deduct a fixed percentage of the building's value from your taxable income each year.
The result is lower tax. At a marginal tax rate of 42 percent, every euro of depreciation saves you 42 cents in tax.
One point matters a great deal: only the building itself can be depreciated. The land underneath is excluded. When you buy a property, the tax authority splits your purchase price into land and building. In cities where land is expensive, the depreciable base can be significantly smaller than the headline price suggests.
Standard AfA: what the build year determines
The default depreciation rate depends on when the building was constructed. Three categories:
| Property | AfA rate | Depreciation period |
|---|---|---|
| Built before 1925 | 2.5 % per year | 40 years |
| Built 1925 to 2022 | 2.0 % per year | 50 years |
| Completed from 2023 | 3.0 % per year | approx. 33 years |
The higher rate for pre-1925 buildings reflects their shorter expected lifespan. The increased rate for new builds from 2023 was introduced deliberately by the German government to stimulate residential construction.
These rates apply automatically. No certificate, no assessment, no special application required.
Degressive AfA: a second option for newer properties
Since October 2023, there is an additional method for new builds: degressive depreciation. It applies to properties where construction began, or a purchase contract was signed, between October 2023 and September 2029.
The rate is 5 percent — but not on a fixed base. It applies to the remaining book value each year. So in year one you depreciate more than in year ten, because the base shrinks with each annual deduction.
No QNG certificate is required for this. The degressive method is a completely separate rule with no connection to sustainability certifications.
When it makes sense: investors who want to front-load their tax benefit in the early years benefit from the higher initial deduction. Those who prefer predictable, stable amounts tend to do better with the linear method.
Restnutzungsdauer assessment: accelerating depreciation on older stock
Buyers of older buildings are not necessarily stuck at two percent. If a specialist assessor demonstrates that the economic remaining useful life of the specific building is shorter than the standard 50-year period, the tax authority allows faster depreciation.
Two percent can become three or four percent. That is a meaningful difference over time.
Since December 2025 this has become easier. The Federal Finance Ministry withdrew a restrictive circular from 2023 that had significantly raised the bar for these assessments. The requirements are now more flexible again.
This is not automatic. The assessment must refer to the specific building, typically costs between 1,500 and 3,000 euros, and must be accepted by the tax authority. It does not make sense for every property.
QNG: when a sustainability certificate unlocks a tax bonus
QNG stands for Qualitätssiegel Nachhaltiges Gebäude — a certification that a building meets certain ecological standards. Most new builds in Germany do not have it. It is not a legal requirement.
For investors, QNG matters for one reason only: the special depreciation allowance under Section 7b of the Income Tax Act (§7b EStG).
What it allows: The Section 7b bonus can be combined with either the linear or the degressive AfA method. The Wachstumschancengesetz (Growth Opportunities Act) explicitly extended the rule to cover both. A BMF circular from 21 May 2025 sets out how the calculation works in practice.
This creates two paths:
- Linear + QNG bonus: 3 percent standard AfA plus 5 percent bonus = 8 percent per year, for four years.
- Degressive + QNG bonus: 5 percent degressive AfA on the full building value plus 5 percent bonus on the capped base (maximum 4,000 euros per square metre of living space). When construction costs are at or below 4,000 euros per square metre, both rates apply to the same base: 10 percent per year, for four years. Where costs are higher, the bonus base is capped and the effective combined rate falls somewhere between 8 and 10 percent depending on the specific property.
What you need for the QNG bonus: The building must be an Effizienzhaus 40 (energy efficiency class 40) and hold a completed QNG certificate. The property must be rented out for at least ten years. "Will be certified" does not count — the certificate must exist.
Two hard statutory limits:
First limit: if construction costs exceed 5,200 euros per square metre of living space, the bonus drops out entirely. In high-cost cities this means it often does not apply at all.
Second limit: even where you stay below 5,200 euros, the calculation base is capped at 4,000 euros per square metre. Everything above that threshold is excluded from the bonus calculation.
The headline numbers are real. Whether they apply to your property depends on these two figures.
What does this mean for your decision?
There is no answer that works for everyone.
A new build with QNG makes sense if you have a high marginal tax rate, substantial equity, and want to minimise ongoing management. The tax effect in the first four years is significant. After that, only the standard rate continues.
An older property with a Restnutzungsdauer assessment makes sense if the entry price is lower, the rental yield is higher, and you are willing to fund the assessment upfront. No certificate needed, but the property has to warrant one.
A new build with degressive AfA but without QNG sits in between. No certification, no assessment, but still higher depreciation than the standard rate for older stock.
What ultimately decides is the specific property: purchase price, land share, rental income, your marginal tax rate, your financing situation, and what you want to achieve with the second property after this one.
If you want to understand which approach fits your next property, we can work through it together. No generic recommendation. Your numbers only.
This article is for general information only and does not constitute personalised tax or legal advice. Please consult a qualified tax adviser before making investment decisions. Correct as of August 2026.