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Property purchases – New guideline for the apportionment of the purchase price

Those who buy rental properties are generally interested in allocating as high a share of the purchase price as possible to the building because only this portion of the costs is factored into the assessment basis used to calculate the depreciation for the building and, thus, reduces the rental income. The other share of the total purchase price, which is apportioned to land, may not be depreciated and, consequently, cannot have the effect of reducing the tax liability.

The fiscal administration would generally recognise a verifiable apportionment of the purchase price that is made in a purchase agreement if the value is not merely illusory and does not constitute an abusive tax scheme.

Therefore, in the purchase agreement it is already possible to influence which (appropriate) share of the purchase price may be depreciated in the future.

The Federal Ministry of Finance has now published, on its internet site, an updated guideline on the apportionment of the purchase price in the case of developed real estate. The inputs for the calculation tool include the total purchase price, the living space and usable space, the size of the plot and the indicative land value. The output will then be the calculated individual values for the land as well as for the structures that have been erected; subsequently, these can be expressed - in accordance with their percentage shares - in purchase price portions in €.

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