Denkmal-AfA: tax relief for listed buildings and the evidence it requires

Denkmal-AfA is the enhanced depreciation for listed buildings under § 7i EStG. A landlord can deduct up to 9 per cent of the qualifying cost a year for eight years, then up to 7 per cent for four years, writing that cost off in 12 years instead of the 40 or 50 of ordinary building depreciation. It covers only construction work that the monument authority agreed before it started and later certifies as necessary. The old structure follows ordinary depreciation, the land is not depreciable, and public grants reduce the base.

For rental tax relief in general, see our tax overview; for old versus new apartments, see new build or existing.

Altbau (an older, usually pre-war building) is not the same as Baudenkmal (a listed building). Many late 19th-century buildings in Leipzig, Dresden and Berlin are protected; many are not. Some are protected only as part of a protected group, in which case § 7i covers only work needed to preserve the external appearance (§ 7i(1) sentence 4 EStG).

Check the official lists rather than the brochure:

• Leipzig and Dresden: the Saxony monument list (Denkmalliste Sachsen), searchable by address. It is informational: protection exists by law whether or not a building appears on it (§ 10 SächsDSchG), and the City of Leipzig advises confirming status with the heritage authorities (Stadt Leipzig).
• Berlin: the Berlin Denkmalliste, kept by the Landesdenkmalamt (State Monument Office), also informational.

Ask the seller for written confirmation from the authority.

The allowance applies to construction costs for work necessary, by type and extent, to preserve the building as a monument or to allow its sensible use, meaning a use that keeps the protected fabric intact (§ 7i(1) sentences 1 and 2). Four conditions apply.

1. Agreement before work starts. The works must be carried out in agreement with the authority (§ 7i(1) sentence 6). Under Saxony's certificate guidelines, a missing prior agreement cannot be replaced later, not even by a later permit (Saxony guidelines, 2.3.1).
2. Necessity, not preference. Heating and bathrooms that adapt the building to contemporary use can qualify. Work done only to improve the return, such as an extra attic flat, usually does not (Saxony guidelines, 2.2.2 and 2.2.3).
3. After your contract. A buyer can claim acquisition costs only for works carried out after the purchase contract became legally effective (§ 7i(1) sentence 5). Anything finished before you signed belongs to the old building.
4. Net of grants. Costs covered by grants from public funds do not qualify (§ 7i(1) sentence 7); heritage grants must appear on the certificate (§ 7i(2) sentence 2). Subtract a grant once, from the base.

The old structure is depreciated at 2.5 per cent a year if completed before 1925, or 2 per cent if completed from 1925 to 2022 (§ 7(4) EStG); the land not at all. Whether the old structure could support a shorter useful life is a separate question: see the Restnutzungsdauer-Gutachten.

You can claim the allowance only with a certificate (Bescheinigung) from the authority designated under state law, confirming monument status and that the expenditure was necessary (§ 7i(2) EStG). The tax office is bound by it unless it is obviously unlawful, but only on heritage questions. Saxony's guidelines limit its binding findings to monument law; the tax office decides whether a certified cost is a construction cost, an acquisition cost, maintenance or not deductible, which costs fall after the contract date, and from which year the allowance applies (Saxony guidelines, 3.1, 6.1 and 6.2). A certified amount is not yet a deduction.

The authorities want final invoices, not instalment invoices, sorted by trade, with proof of payment, photographs and the heritage permit. Dresden accepts applications only after documented completion and charges 0.8 per cent of the amount applied for, within a €50 to €25,000 range (Dresden).

Most investors meet Denkmal-AfA through a developer (Bauträger) who buys an unrenovated listed building, divides it into apartments and sells each with a renovation obligation. The notarised price is split into land, old structure (Altbausubstanz) and renovation share (Sanierungsanteil). The certified amount can include the developer's overheads and margin and a share of transfer tax, but only the part the tax office accepts as § 7i acquisition cost qualifies (Saxony guidelines, 3.3).

Four checks matter:

• Contract date versus works. Only works carried out after your contract count. Buying late in a project means less qualifying cost.
• The split. The developer proposes it; the tax office can test it. A high renovation share flatters the tax figures, so ask how it was derived (purchase-price split).
• Developer insolvency. Without final invoices, Saxony certifies only on a building expert's report itemised by trade, capped at the price you paid (Saxony guidelines, 7.1).
• The price. A tax benefit tends to be priced in. First compare price per square metre and rent with renovated, unlisted apartments nearby.

The authority certifies; the tax office classifies; your Steuerberater (tax adviser) applies it to your return.

If you buy an unrenovated listed building privately and renovate it yourself, first check whether the work becomes a construction cost under the 15 per cent rule. Agreed maintenance on a listed building can instead be spread over two to five years (§ 11b EStG).

Illustrative example. Fictional figures, not a real project, offer or forecast. A 75 m² apartment in a listed Leipzig building completed in 1902, bought from a developer for €390,000. Contract notarised 1 December 2026; the works, agreed with the city's monument department, start in February 2027. Completion and transfer of benefits and burdens (Übergang von Nutzen und Lasten) in January 2029; let from then. Purchase costs 7.5 per cent (Saxony's 5.5 per cent transfer tax (Saxon State Government) plus 2 per cent notary and land registry; no agent), allocated pro rata. The authority certifies €275,000 of the €292,500 renovation share; €17,500 for new balconies is not certifiable. No grants. The tax office is assumed to accept the certified amount and its share of purchase costs. Marginal rate 42 per cent throughout: income tax only, single filer, 2026 tariff held constant (§ 32a EStG), which needs taxable income of roughly €100,000 or more before these deductions. Rent, interest and running costs are left out.

Tax effects rounded to the euro; the total is calculated before rounding, so the rounded rows add to €134,452.

Each tax effect is lower income tax in that year's assessment, and it depends on the certificate having been issued. From 2041, only the €2,042.50 of ordinary AfA continues.

Is the listed apartment worth the extra? Suppose a comparable renovated, unlisted apartment nearby costs €300,000, with the same land value and purchase-cost rate. The listed one costs €96,750 more including purchase costs. Over 12 years, its deductions cut income tax by about €99,100 more than the unlisted apartment's 2.5 per cent AfA (€134,457 against €35,352). That is mostly the premium coming back, not a gain: over both buildings' lives, the extra depreciation equals the €96,750 extra you paid. The purchase makes sense only if price, rent and location stand up without the tax effect, and your marginal rate stays high for 12 years.

If you live in the listed apartment yourself, § 10f EStG applies instead: the same kind of qualifying cost is deducted like special expenses (Sonderausgaben), up to 9 per cent in the completion year and each of the nine following years (at most 90 per cent), only for years you live there. It covers one building per person, or two for jointly assessed spouses, and the same cost cannot be claimed under both rules for the same period. Buildings in a formally designated redevelopment area (Sanierungsgebiet) follow the same 9 and 7 per cent schedule under § 7h EStG, certified by the municipality.

Ask for the authority's confirmation of monument status, the heritage permit or written agreement on the planned works, a construction description separating certifiable from non-certifiable items, the price split, and the developer's commitment to supply final invoices. An authority's written assurance (Zusicherung) on the expected certificate helps, but only the tax office can give a binding view of the tax base (Saxony guidelines, 2.3.3).

Alpha Minoris's Buyer's Agent service can collect these papers during a purchase in Berlin, Dresden or Leipzig: the confirmation of listed status, the authority's agreement on the planned works and the refurbishment documentation, alongside viewings, financing and notary coordination until the keys. You need not live in any of the three cities. Approval and certification stay with the monument authority; the tax assessment stays with the tax office and your Steuerberater.

Before you sign for a listed apartment, test the price and rent without the tax effect, then ask a Steuerberater to review the split and the certificate route. Discuss your first rental property with Alpha Minoris.