Tax advantages for builders' models, investment apartments and income-generating apartments in old buildings

Jul 19, 2021, 4:51 PM
A brief overview of the tax advantages of building owner models, investment apartments and income-generating apartments in old buildings

Bauherrenmodell – “Builder models”, tax-relief scheme for construction of residential and commercial properties

With these models investors acquire ideal co-ownership shares in a built-up property, often also in the form of a partnership. A redevelopment of the property, possibly also with an attic conversion, can be used for tax purposes after deduction of any subsidies. The establishment of residential property is usually excluded, at least for the duration of the funding. "Rent pooling" is also often offered as a risk compensation. As a result of the renovation subsidies granted, the rent will usually be capped, but the risk of default and vacancy will be low.

Investment apartment

The so-called “investment apartments” should be mentioned as an alternative to builder models. In contrast to building owner models, these offer apartment ownership in certain residential units, mostly for buildings that are in the process of being constructed. In the course of the rental, the resulting operating costs can be used for tax purposes. Since it is mostly new buildings, the depreciation of 1.5% is to be applied to the rental and leasing type of income; a partial deduction of renovation costs is only conceivable in the rarest of cases. In addition, the stable value and the rent that is not restricted by the funding provisions or the MRG are to be noted as advantages.

Old building apartment - "income apartment"

The last investment option in the real estate sector "on a small scale" should be mentioned in the form of an apartment in an old building. It prevents the more or less anonymized participation in a co-owner association in the form of the builder model with the assignment to a specific apartment property. The higher expenses and the resulting higher tax loss allocation are secured by the rent, which is mostly subject to tenancy law.

More details as well as examples can be found in the attached PDF file in German. For English or Russian version, please contact us via