Federal Council Passes Annual Tax Act 2024: No Changes to Depreciation Rules for Real Estate

On November 22, 2024, the Federal Council approved the Annual Tax Act 2024 (JStG 2024) as adopted by the Bundestag. Planned changes to the rules on the remaining useful life of real estate were excluded. Initially, the proposed amendments sought to limit the tax recognition of shortened depreciation periods for real estate. Shortened periods would only have been recognized if they were less than 20% of the statutory total useful life, equivalent to a maximum of 10 years. Additionally, stricter requirements for appraisals were proposed, including mandatory on-site inspections and detailed assessments of the building’s condition.

Since these proposals were not included in the final law, current regulations remain unchanged. Taxpayers can still claim shortened depreciation periods without adhering to stricter requirements. However, it is recommended to align appraisals with existing guidelines from the February 2023 BMF directive, which emphasizes individualized evaluations over standardized calculations.

Ampel Coalition Collapse Shakes Real Estate Plans

The collapse of the Ampel coalition on November 6 has significant repercussions for the real estate sector. Numerous legislative projects and funding initiatives are now in jeopardy, causing uncertainty for investors and developers. Key affected projects include:

1. Rent cap reforms:

   The planned reduction of the rent increase cap from 15% to 11% over three years is now uncertain.

2. Social housing incentives:

   Proposed tax benefits for landlords offering affordable housing could be delayed or canceled.

3. Climate-friendly construction programs:

   Funding for energy-efficient buildings is at risk, slowing the green transition in construction.

4. BauGB reform:

   Planned changes to expedite permitting and planning may stall.

5. Cost-reduction measures:

   Efforts to lower building standards and reduce bureaucracy may stagnate, exacerbating rising costs.

Political uncertainty not only threatens these projects but also discourages investment and construction activity. Experts warn of long-term impacts on housing development and sustainability.

Day of the Housing Industry 2024: Housing and Climate in the Election Spotlight

On November 19, 2024, the Day of the Housing Industry took place in Berlin, heavily influenced by the upcoming election. Industry representatives voiced concerns over declining building permits and mounting construction costs. Axel Gedaschko, President of the GdW Federal Association, criticized the current political climate, emphasizing that social housing providers and their tenants face unsustainable expenses, particularly concerning climate targets. He called for a "real boost for new construction," a shift in climate policies, and improved financing conditions.

Federal Building Minister Klara Geywitz (SPD) underscored the importance of accelerating housing projects and reducing construction standards to enable faster, cost-effective building. She praised the GdW framework for modular construction as a forward-looking solution to current challenges, while also criticizing Robert Habeck’s heating law in a clear nod to election strategies.

The event highlighted the sector’s tense situation and the urgent need for political measures to balance affordable housing, climate goals, and social equity.