Gifted or inherited rental property: does depreciation or the ten-year clock restart?

Usually neither restarts. If you inherit a German rental flat, or receive it as a gift without paying anything, you step into the previous owner's position: you continue their depreciation (Absetzung für Abnutzung, AfA) on their original cost and at their rate, for whatever is left, and the ten-year period for a taxable private sale keeps running from their purchase contract. The flat's current market value is not a new depreciation base. Only a part you pay for, for example by taking over the donor's loan or paying a sibling, counts as a purchase, with its own base and its own ten-year clock. Inheritance and gift tax is a separate question.

This guide covers privately held property and builds on our AfA schedule guide and the ten-year sale rule. For company-held property, see private ownership or an Immobilien-GmbH.

The income-tax test is whether the recipient gave anything in return.

For private property acquired without payment, AfA uses the predecessor's acquisition or construction cost and the rate that would apply if they still owned it, plus any construction costs you add. It stops once predecessor and successor together have deducted the full amount (§ 11d(1) EStDV). The tax administration applies this to heirs, who take over the estate gratuitously, and to legatees (BMF letter of 14 March 2006, paras. 1, 60 and 62).

• No step-up. An inheritance-tax valuation or a market estimate does not replace the predecessor's base, so you need their purchase file and the AfA already claimed, from their returns or tax adviser (Steuerberater).
• Your transfer costs can count. The Federal Fiscal Court (Bundesfinanzhof, BFH) let an heir depreciate the notary and land-registry costs of an estate partition, for the building share (IX R 43/11).

For a gift, the statute attributes the donor's acquisition to you (§ 23(1) sentence 3 EStG). An heir takes over the estate as a whole, debts included (§§ 1922 and 1967 BGB), and the tax administration treats both cases alike (BMF letter of 5 October 2000, paras. 10 and 26).

A part-paid transfer is split in the ratio of the payment (without incidental costs) to the property's market value (Verkehrswert) (BMF letter of 13 January 1993, para. 14 as reworded on 26 February 2007). The paid part is a purchase: its own cost, its own AfA at the rate for the building's completion date (§ 7(4) EStG) and its own ten-year period from the new contract. The unpaid part continues the predecessor's AfA (BMF letter of 14 March 2006, para. 31).

What counts as payment depends on the route:

• Lifetime transfers. Equalisation payments to siblings (Gleichstellungsgelder), payments to the donor and the donor's debts you take over all count (BMF 1993 letter, paras. 7 and 9). A usufruct or right of residence the donor keeps does not (para. 10).
• Estate partitions. Compensation one heir pays the others from their own money creates acquisition costs (BMF 2006 letter, para. 26). Taking over more of the estate's debts than your share does not (paras. 23 and 24), nor does paying a compulsory share (Pflichtteil) or a legacy (para. 35).
• Buying a co-heir's share of the undivided estate (Erbteil) is not a part-purchase of the property for the ten-year rule, the BFH held in 2023, against the ministry's view (IX R 13/22).

The legal form of a buy-out matters. The other side has sold a part: the paid co-heir in a partition (BMF 2006 letter, paras. 26 and 27) or, in the administration's view, the parent in a lifetime transfer. Inside their own ten years, that can be taxable.

Illustrative example. Fictional figures; the treatment requires validation by a tax adviser. Apartment A from our AfA guide: Leipzig, building completed 1996, purchase contract notarised 15 January 2026, benefits and burdens from 1 April 2026, building base €199,026, AfA 2 per cent (€3,980.52 a year), let throughout. Loan €216,000 at 3.7 per cent nominal, 2 per cent initial repayment, €1,026 a month from May 2026; €191,445 outstanding on 1 July 2031. Market value on 1 July 2031 assumed at €280,000, 25 per cent of it land. Scenario 1: the owner dies on 1 July 2031; her daughter is sole heir. Scenario 2: on Tuesday 1 July 2031 the owner transfers the flat to her daughter by notarised contract, benefits and burdens passing that day; the daughter takes over the loan with the bank's consent (§ 415 BGB) and pays nothing else. Transfer costs left out. The 2031 AfA is assumed to be split by months, January to June going to the mother.

In scenario 1, nothing restarts: the daughter continues the original schedule at €3,980.52 a year until 2076, and the €280,000 market value plays no part.

Scenario 2 looks like a gift, but the loan makes most of it a purchase. The AfA rises a little, and the clock splits: a sale in 2037 would be outside the rule for 31.63 per cent and inside it for 68.37 per cent (BMF 2000 letter, para. 30).

Variant. Had the daughter instead paid her brother €60,000, with no loan taken over, the paid share would be 21.43 per cent: a new building base of €45,000 and €900 a year of AfA, while 78.57 per cent continues at €3,127.55.

The mother's side. On the tax administration's split method, the paid part is a sale within her own ten years, with a gain of about €24,293 (€191,445 less 68.37 per cent of her €265,368 cost after €20,897.73 of AfA). The Lower Saxony Finance Court rejected taxing such transfers where the payment stays below the original cost (3 K 36/24); the appeal is before the BFH (IX R 17/24). Take advice before signing.

Parents often hand over a flat but keep a usufruct (Nießbrauch), the right to use it and collect the rent, usually for life. It is not payment, so the transfer stays gratuitous. While the parent lets the flat under it, the rent and the AfA remain theirs (BFH, IX R 1/21; BMF letter of 30 September 2013, para. 42). As owner, you claim no AfA until the usufruct ends; from then, the AfA on the building is yours if you let it (para. 46).

• Inherited loan. It passes with the estate without making the inheritance a purchase. Its treatment follows the asset it relates to and how you use it (BMF 2006 letter, para. 34): while it finances the flat and you let it, the interest stays deductible.
• Loan taken over on a lifetime transfer, or borrowed to pay a sibling or the donor: it funds the paid part, and the interest is deductible while the flat is let.
• Loan to pay a compulsory share or a legacy: interest not deductible (para. 35).

Repayment is never deductible, and if you move in, the interest stops being a rental expense.

Inheritance and gift tax (Erbschaft- und Schenkungsteuer) uses its own values; none of them changes your AfA base or ten-year date.

• Relationship. Your tax class and personal allowance depend on your relationship to the deceased or donor (§ 15 ErbStG). Checked on 4 October 2026, the statute allowed €500,000 for a spouse or registered partner and €400,000 for each child, among other amounts (§ 16(1) ErbStG), reduced under limited tax liability (§ 16(2)), which can affect families abroad (moving abroad). Recheck them at transfer.
• A different ten years. Transfers from the same person within ten years are added together (§ 14(1) ErbStG).
• Valuation. Apartments are generally valued by comparison with sale prices (§ 12(3) ErbStG; § 182(2) BewG).
• Let homes at 90 per cent. Buildings let for residential use are included at 90 per cent of their value, unless you must pass them on to someone else (§ 13d ErbStG).
• Transfer tax. Inheritances, gifts, partitions between co-heirs and transfers between relatives in a direct line are generally exempt (§ 3 GrEStG).

Collect the predecessor's purchase contract and invoices, the land and building split, AfA schedule, recent tax assessments, loan agreement, lease and owners' association papers, plus your certificate of inheritance (Erbschein) or transfer contract and any market-value evidence.

The lease continues with you as landlord, through universal succession or, on a lifetime transfer, under § 566 BGB. If the flat is in Berlin, Dresden or Leipzig, Alpha Minoris's Vermieter-Autopilot can take on the ongoing landlord tasks under a mandate newly agreed with you: finding tenants, rental contracting, coordinating repairs and day-to-day matters, with scope and spending approvals in writing (what unit management covers). You need not live in the city. It gives no succession, tax or legal advice, which stays with the notary, a lawyer and your Steuerberater, and you remain the landlord.

If you have inherited a let flat in Berlin, Dresden or Leipzig, or expect to, start with its figures, its tenancy and how it would be run from where you live. Discuss your first rental property with Alpha Minoris.