Key statements of the judgment
- Increased right to choose useful life: Actual instead of standardized
- The tax court clarifies that taxpayers are free to choose whether to base depreciation on the standardized useful life (regularly 50 years) or the actual - shorter - remaining useful life. The wording "may" in Section 7 para. 4 sentence 2 EStG establishes a genuine right of choice and is not merely to be understood as an exception. In the opinion of the court, this option may not be restricted by restrictive requirements of the tax authorities.
- Economic rather than technical criteria are decisive
- In the opinion of the tax court, the determination of the actual remaining useful life can also be based on the economic depreciation of a building - even if the structure of the building would allow it to be used for a longer period. The Münster tax court thus follows the case law of the Federal Fiscal Court (e.g. ruling of 23.01.2024 - IX R 14/23), according to which location factors or functional usability in particular can be decisive.
Wording of the judgment
Facts of the case
A decision is to be made on the remaining useful life to be applied for the depreciation for wear and tear (AfA) of a rented property.
The plaintiff is assessed for income tax alone in the 2020 year of dispute. He earns income from employment as well as income from letting and leasing several properties.
By notarized property purchase agreement dated 12.02.2020, the plaintiff acquired a 149 sqm property with the postal address B-straße ... in C. The property is developed with an apartment building built around 1963 with four residential units rented in the year of the dispute and a total living space of 213 sqm. The purchase price was € 310,000. The transfer of ownership, benefits and encumbrances was to take place upon receipt of the purchase price by the seller, whereby the contracting parties also had it included in the contract that they were "in agreement" for the "internal settlement" that the buyer would be entitled to the rents from January 1, 2020 and that the buyer would bear the costs associated with the property. Reference is made to the property purchase agreement for details. It is not known when the seller received the purchase price. The plaintiff was entered in the land register as the owner of the property on 27.03.2020.
In the income tax return for 2020, the plaintiff declared positive income from renting and leasing from the property in the amount of € 2,054.45, whereby he declared rental income totaling € 12,390 from January 2020. He calculated the depreciation based on Section 7 (4) sentence 1 of the old version of the German Income Tax Act (EStG) at € 5,919.25 (€ 295,962.72 x 2 %). He stated the acquisition costs of the property at € 334,702.72 and allocated € 38,740.00 to the land and € 295,962.72 to the building.
The defendant did not follow this. By notice dated 29.09.2021, it set the income tax for 2020 at ... €. In the explanatory notes to the assessment notice, he stated that the depreciation could only be applied pro rata temporis for the months of March to December due to the transfer of ownership in the year in dispute. Furthermore, the assessment basis - due to higher acquisition costs for the land - amounted to only € 258,190. The (pro rata temporis) depreciation therefore amounted to € 4,304 in 2020 and € 5,164 in each of the following years.
The claimant lodged an appeal against the decision on 08.10.2021. As grounds, he stated - in addition to several points that are no longer in dispute - that the depreciation for the property B-straße ... had been set too low. It amounted to € 5,911.51.
In a letter of discussion dated 10.12.2021, the defendant pointed out that he had made a calculation error when determining the AfA. The assessment basis was € 292,825 (88 % of the acquisition costs) and the annual depreciation was € 5,856. The defendant requested further evidence regarding the transfer of ownership. In particular, that the previous owner had passed on the rents still received in the year in dispute to the plaintiff.
In an objection decision dated 24.02.2023, the defendant partially rejected the objection due to points that were no longer in dispute and set the income tax at ... €. In doing so, it now took into account the depreciation for the property B-straße ... in the amount of € 5,176 (€ 258,772 x 2 %).
With the complaint filed on 24.03.2023, the plaintiff asserted, among other things, that the depreciation for the property B-straße amounted to € 12,024 in the year in dispute, as the assessment basis was € 276,412 (83.05 % of the acquisition costs) and the actual remaining useful life of the property was only 23 years. The annual depreciation therefore amounts to 4.35% of the acquisition costs.
In this regard, he submits a calculation for the allocation of the property purchase price as well as an expert opinion for determining the remaining useful life of expert D dated 17.04.2023, to which reference is made for details. On the reference date of 01.02.2020, the expert determined a remaining economic useful life of 23 years. The appraisal is essentially based on the "Model for determining the remaining useful life of residential buildings in the event of modernization" in accordance with Annex 2 to Section 12 (5) sentence 1 of the Real Estate Value Ordinance (ImmoWertV) and the information provided by the plaintiff on the year of construction, subsequent modernization measures and condition, as well as on the documents submitted to the appraiser by the plaintiff (land register excerpt dated 30.03.2020, energy certificate for residential buildings dated 01.12.2019, construction drawings and photos). The expert did not initially visit the property.
On the cover sheet of the expert opinion, the expert states that he is a DIN EN ISO/IEC 17024-certified expert for real estate valuation. Furthermore, he is a certified expert for real estate valuation by the Chamber of Industry and Commerce (IHK E). In addition, he is a TÜV F tested and certified expert for building damage and construction defects and a TÜV G tested and certified expert for mold damage in interior spaces. Finally, he is a member of the German Association of Experts and Surveyors (DGuSV) and the Federal Association of German Experts and Specialist Surveyors (BDSF). A voluntary expert plausibility check of the appraisal was carried out by the expert for real estate valuation (IHK E) H. A corresponding confirmation is attached to the appraisal.
To justify the higher depreciation, the plaintiff further states that the depreciation for the property was to be calculated on the basis of a remaining useful life of 23 years in accordance with Section 7 (4) sentence 2 EStG on the basis of the expert opinion. This also follows from the letter from the Federal Ministry of Finance (BMF) dated 22.02.2023 (Bundessteuerblatt - BStBl - I 2023, 332). According to this, the decisive factor is how long a building can be expected to be used for its intended purpose. The actual circumstances of the individual case had been examined and assessed accordingly by the expert in the case in dispute. The expert opinion proved that, objectively speaking, the building was economically used up before the end of the usual depreciation period. According to the BMF letter, it was sufficient for the building to be technically or economically used up, but not both cumulatively.
It is irrelevant whether the expert personally inspects the conditions on site or has commissioned a vicarious agent.
The expert opinion was also sufficiently detailed. It is clear from the BMF letter that no building substance report is required. However, the defendant demanded this by requesting an even more detailed description of the condition of the property. The expert opinion had also been drawn up specifically on the question of the remaining useful life. The fact that the valuer had based this on the ImmoWertV and AGVGA guidelines was permissible (see Münster Tax Court, 1 K 3840/19 F and 1 K 3841/19 F).
The plaintiff also submitted a multi-page statement by the expert dated 4 August 2023, in which he further explained and defended his expert opinion. Reference is made to the statement for details.
The expert, D, was also sufficiently certified. The examination was carried out on the basis of the certification rules of ADA InVivi BV - Gesellschaft zur Zertifizierung von Personen and DIN EN ISO/IEC 17024. The plaintiff submits a corresponding certificate from the expert, to which reference is made.
In the discussion meeting on 23.07.2024, the parties involved agreed - in addition to numerous other points that are no longer in dispute - that the assessment basis for the depreciation of the property B-straße ... - after deducting the acquisition costs for the land - is € 266,261 and that the plaintiff's depreciation begins on 01.03.2020. By decision dated 13.12.2024, the defendant implemented the other understandings from the discussion meeting and set the income tax at ... €.
The plaintiff requested
to amend the income tax assessment notice for 2020 dated 13.12.2024 to the effect that the income from letting and leasing is reduced by € 4,476 (€ 266,261 x 4.35 % / 12 x 10 months = € 9,652 instead of the previous € 5,176).
The defendant requested
dismiss the claim.
The defendant argues that the depreciation for the property B-straße ... is to be determined at 2% of the acquisition costs for the building using a typical remaining useful life of 50 years in accordance with Section 7 (4) sentence 1 no. 2 b) EStG. A shorter useful life could be used to calculate depreciation in accordance with Section 7 (4) sentence 2 EStG if the actual useful life of a building is less than 50 years. According to the letter from the Federal Ministry of Finance (BMF letter) dated 22.02.2023, the taxpayer has the option to depreciate according to the actual useful life instead of according to standardized fixed depreciation rates, provided that individual evidence is provided. In the case in dispute, however, the plaintiff had not provided sufficient evidence of a shorter actual useful life. In particular, the ImmoWertV model approaches used in the expert opinion were not suitable for demonstrating a shorter remaining useful life. Furthermore, the expert opinion completely ignores the refurbishment in 1993. Furthermore, it was not apparent from the report that the expert had inspected the property.
Furthermore, expert D was not an expert accredited in accordance with DIN EN ISO/IEC 17024. His accreditation had been granted by "Ada InViva BV", which is based in the Netherlands. However, this is not an accredited certification body for the valuation of real estate. The implementation of the accreditation is a sovereign act. Article 4 (1) of Regulation EC No. 765/2008 ("Rules on accreditation and market surveillance relating to the marketing of products") stipulates that each EU Member State must designate a single national accreditation body. The German accreditation body is the Deutsche Akkreditierungsstelle GmbH (DAkkS). The European Cooperation for Accreditation (EA) was established on the basis of Article 14 of Regulation (EC) No. 765/2008. The EA's tasks include the harmonization and further development of the accreditation system in Europe. The EA also coordinates the accreditation system in Europe, including regular monitoring. According to Art. 11 Para. 2 of Regulation (EC) No. 765/2008, national authorities recognize the equivalence of services provided by national accreditation bodies if they successfully undergo EA monitoring. The EA currently has around 50 members, which are officially recognized by the national governments and carry out the sovereign act of accreditation. The Netherlands is a member of the EA. However, the Dutch accreditation body is the "Raad voor Accreditatie" (RVA) and not Ada InVivo BV. An accreditation of this company is not apparent.
According to the BFH ruling of 23.01.2024, an expert appraisal is (still) required to estimate the useful life of the property - as is also the case according to the BMF letter. According to Dr. Trossen's comment on the ruling (NWB FAAAJ-66687), this means in practice that an expert opinion from a publicly appointed and sworn expert is still required to assert the deviating useful life, which in particular comments on the individual circumstances of the property to be valued. Since Trossen requires a publicly appointed and sworn expert, his opinion is even stricter than the requirements stated in the BMF letter.
Furthermore, the expert opinion was not to be followed because the expert had not inspected the property. However, this is necessary as experts have to prepare expert opinions in their own person. This also includes personally attending a site visit. Nothing to the contrary can be inferred from the BFH ruling of 23.01.2024, as a site visit took place there. Furthermore, a site visit is prescribed in accordance with the relevant expert regulations (e.g. Section 10 of the expert regulations of the North Rhine-Westphalia Chamber of Industry and Commerce).
In a letter dated 21.03.2025, the expert stated that he had carried out a subsequent site inspection of the property B-straße ... in C on the same day. The property was found to be in the same state of modernization that he had already recorded in the expert opinion. He had not made any findings deviating from the expert opinion on the basis of the site visit. The remaining useful life determined in the expert opinion remains unchanged.
For further details, reference is made to the content of the court file and the content of the administrative file submitted by the defendant.
The rapporteur held a hearing on 27.07.2024 and the Senate heard the case orally on 02.04.2025. Reference is made to the minutes for details.
Reasons for the decision
The admissible action is well-founded.
The income tax assessment for 2020 dated 13.12.2024 is unlawful and infringes the plaintiff's rights (Section 100 (1) sentence 1 of the German Fiscal Court Code - FGO). The defendant wrongly used the standardized useful life pursuant to Section 7 (4) sentence 1 no. 2 EStG and not a shorter useful life pursuant to Section 7 (4) sentence 2 EStG when determining the plaintiff's income from renting and leasing the property B-straße ... in C. 1.
1. in the case of assets whose use or utilization by the taxpayer to generate income is expected to extend over a period of more than one year, the portion of the acquisition or production costs that is attributable to one year if these costs are distributed evenly over the total period of use or utilization (depreciation in equal annual amounts, § 7 para. 1 sentence 1 EStG) is to be deducted for each year; the deduction is based on the normal useful life of the asset (§ 7 para. 1 sentence 2 EStG). Deviating from this, the depreciation for a building used to generate income is determined according to the fixed percentages of Section 7 para. 4 sentence 1 EStG; the regulation represents a legal standardization of the useful life within the meaning of Section 7 para. 1 sentence 2 EStG (BFH, judgment of 28.07.2021 - IX R 25/19, BFH/NV 2022, 108).
According to Section 7 para. 4 sentence 2 EStG in the version applicable in the year in dispute, the depreciation corresponding to the actual useful life of a building can be applied instead of the depreciation according to sentence 1 of the provision. The useful life in the legal sense is the period during which a building can probably be used in accordance with its intended purpose (§ 11c para. 1 sentence 1 of the Income Tax Implementation Ordinance - EStDV -).
§ Section 7 para. 4 sentence 2 EStG grants the taxpayer the right to choose ("may") whether to be satisfied with the standardized fixed depreciation rate according to sentence 1 of the provision or to claim a shorter actual useful life (BFH, judgment of 28.07.2021 - IX R 25/19, para. 20, with further references).
The useful life is determined by technical wear and tear, economic depreciation and legal circumstances that may limit the useful life of an item. The starting point is the technical useful life, i.e. the period in which the asset is subject to technical wear and tear. However, if the economic useful life is shorter than the technical useful life, the taxpayer can invoke this (BFH, judgment of 23.01.2024 - IX R 14/23, BFH/NV 2024, 823, with further references).
The taxpayer bears the burden of proving and establishing a shorter actual useful life (instead of many Anzinger in Herrmann/Heuer/Raupach - HHR -, Section 7 EStG Rz 306). The useful life must be estimated. According to general principles, such an estimate does not require certainty, but rather only the greatest possible probability (as already stated in the BFH ruling of 28.09.1971 - VIII R 73/68, BFHE 103, 468, BStBl II 1972, 176). The estimate is only to be rejected if it is clearly outside the reasonable estimation framework (BFH, judgment of 28.07.2021 - IX R 25/19). The assessment of the basis of the estimate is the responsibility of the tax court as the court of fact in the action (BFH, judgment of 23.01.2024 - IX R 14/23, BFH/NV 2024, 823, with further references).
According to the case law of the BFH, the taxpayer can use any expert method that appears suitable in the individual case to provide the necessary evidence to demonstrate a shorter actual useful life. The method chosen must provide information on the relevant determinants of the useful life - for example, technical wear and tear, economic depreciation, legal restrictions on use. Precisely because of the fact that the correctness of the useful life to be estimated must only be based on the greatest possible probability, the taxpayer's burden of proof would be overstretched if the estimate had to be based on a specific expert opinion methodology (e.g. building fabric expert opinion) or a specific determination procedure. As a result, the BFH has expressly recognized that an expert opinion method, by which the remaining useful life of a building is determined economically on a model basis, can also suffice as evidence for the use of Section 7 para. 4 sentence 2 EStG (BFH, judgement of 28.07.2021 - IX R 25/19 and BFH, judgement of 23.01.2024 - IX R 14/23, BFH/NV 2024, 823 with further references).
Moreover, the BFH has already ruled that the more extensive requirements and restrictions that the tax authorities set out in margin no. 23 f. of the letter from the Federal Ministry of Finance (BMF) dated 22.02.2023 (BStBl I 2023, 332) for the proof of a shorter actual useful life by means of expert opinions cannot be fully inferred from the law. Neither Section 7 (4) sentence 2 EStG nor Section 11c (1) sentence 1 EStDV specify how and on the basis of which expert opinion method the period in which a building can be expected to be used in accordance with its intended purpose is to be estimated. For this reason alone, the BMF's instruction in margin no. 24 of its letter that the "mere adoption" of a remaining useful life from a market value appraisal is not sufficient as proof of a shorter actual useful life is not tenable. In particular, the expert determination of the remaining useful life in accordance with Section 6 (6) ImmoWertV 2010 (now Section 4 (3) of the Real Estate Valuation Ordinance of 14.07.2021 - ImmoWertV 2021 -, BGBl I 2021 2805) is an appraisal method recognized by experts (Brandis/Heuermann/Brandis, Section 7 EStG Rz 522; Graw, juris PraxisReport Steuerrecht 5/2022, Anm. 3), which cannot be ruled out for tax law estimates without a statutory directive (BFH, judgment of 23.01.2024 - IX R 14/23, BFH/NV 2024, 823, with further references).
Furthermore, the BFH has already ruled that the objection that the total useful life and remaining useful life of a building determined in accordance with the provisions of the relevant Real Estate Valuation Ordinance do not lead to "appropriate results" for the purposes of Section 7 para. 4 sentence 2 EStG (BMF letter dated 22.02.2023, BStBl I 2023, 332, margin no. 24) is unjustified (BFH, ruling of 23.01.2024 - IX R 14/23, BFH/NV 2024, 823). In particular, it does not take into account the fact that, despite an essentially model - expert - calculation of the useful life, the actual circumstances of the individual case are included (Blum/Weiss, Die Steuerliche Betriebsprüfung 2020, 3, 7). Section 6 para. 6 sentence 1 clause 2 ImmoWertV 2010 stipulates that repairs or modernizations carried out or maintenance not performed or other circumstances - i.e. individual circumstances - can extend or shorten the remaining useful life. Annex 2 to section 12 (5) sentence 1 ImmoWertV 2021 uses a point grid procedure to determine the extent to which the respective modernization elements modify the remaining useful life depending on the total useful life. This is a standardized approach (Grotherr, Steuern und Bilanzen 2023, 457, 460), which is not alien to an estimate under tax law (BFH, judgment of 23.01.2024 - IX R 14/23, BFH/NV 2024, 823, with further references).
According to the case law of the BFH, an expert opinion based on the requirements of the relevant Real Estate Valuation Ordinance is also suitable for providing information on the determinants relevant to the actual useful life (BFH, judgment of 23.01.2024 - IX R 14/23, BFH/NV 2024, 823, with further references). § Section 4 (3) sentence 1 ImmoWertV 2021 stipulates an economic determination of the remaining useful life and is therefore not based on the technical wear and tear of a building. However, it would be wrong to demand that an expert opinion must address all determinants relevant to the remaining useful life. If the taxpayer justifies the shorter actual useful life with economic wear and tear or an earlier devaluation based on legal circumstances, there is no need for expert findings on the technical wear and tear of the building, as the shorter economic or legal useful life is either only dependent on the technical condition of the building to a limited extent or, in most cases, not at all (BFH, judgment of 23.01.2024 - IX R 14/23, BFH/NV 2024, 823, with further references).
According to these standards, which the Senate follows, the Senate has come to the conclusion, on the basis of the expert opinion submitted by the plaintiff, that the depreciation for the property B-straße ... in C is to be recognized in accordance with Section 7 (4) sentence 2 EStG using the actual useful life of 23 years.
The expert opinion submitted by the plaintiff satisfies the requirements set out above. In it, the expert used the "Model for determining the remaining useful life of residential buildings in the case of modernizations" in accordance with Annex 2 to Section 12 (5) sentence 1 ImmoWertV 2021 to determine the remaining useful life of the property - which he explained and justified. As explained, this model-based method is suitable for providing information on the determinants relevant to the actual useful life. Since, according to the case law of the BFH, the expert opinion does not have to deal with all determinants relevant to the remaining useful life, it is also harmless that the expert essentially focused on the economic remaining useful life in the expert opinion.
The defendant's other objections are also not valid.
The Senate cannot accept the defendant's objection that the modernization measures carried out in 1993 were wrongly not taken into account. It is clear from the expert's explanations on pages 24 and 25 of the report that the expert used a points model based on Annex 2 to § 12 para. 5 sentence 1 ImmoWertV as a guide to determine the degree of modernization of the property and, in particular, took into account significant modernization measures carried out. According to this, a maximum of 20 points were to be awarded for modernization elements described in more detail (e.g. roof renewal including improvement of the thermal insulation, maximum 4 points). It also stated that for significant modernization measures carried out some time ago, it should be examined whether fewer points than the maximum points to be awarded should be applied. Applying this points system, the expert then only awarded one point for the partial modernization of the heating system in 2018. For all other elements, he determined that no significant modernization measures had been carried out within the last 25 years prior to the assessment date. In this respect, no points were awarded. Accordingly, the renovation measures carried out in 1993 had no effect, as they were carried out more than 25 years before the assessment date (01.02.2020) and the expert's further examination showed that they were not such significant modernization measures for which points were still to be awarded despite the long period of time. Furthermore, the expert stated in the letter dated 21.03.2025 that the property showed the degree of modernization on inspection (at the subsequent on-site visit) that he had based his report on.
Insofar as the defendant is of the opinion that the expert opinion submitted by the plaintiff is not suitable for proving a shorter actual useful life because the plaintiff has not proven that the expert D rightly holds the certification as an expert for real estate valuation according to DIN EN ISO/IEC 17024 stated by him, the Senate does not follow this. The Senate cannot infer from the law (Section 7 (4) sentence 2 EStG) or the decisions of the BFH of 28.07.2021 (IX R 25/19, BFH/NV 2022, 108) and 23.01.2024 (IX R 14/23, BFH/NV 2024, 823) that a corresponding certification of the appraiser is mandatory for the proof of a shorter actual useful life. In particular, a reverse conclusion to Section 198 (2) of the Valuation Act (BewG) in the version of the law of 16.07.2021 (BGBl I 2931) speaks against such a requirement. There, the legislator has expressly regulated alternative formal requirements for the expert - including certification in accordance with DIN EN ISO/IEC 17024. Section 7 para. 4 sentence 2 EStG does not contain such formal requirements. The formal requirements placed on the expert by the tax authorities in para. 22 of the BMF letter dated 22.02.2023 can therefore not be found in the law.
In the case in dispute, the Senate is also unable to determine that the expert D is not sufficiently qualified with regard to the expert opinion he prepared. Even if Ada InViva BV was not sufficiently accredited to issue the expert with the DIN EN ISO/IEC 17024 certificate submitted by him, it can still be established that D is a certified expert for real estate valuation by the Chamber of Industry and Commerce, a certified expert for building damage and construction defects by TÜV F and a certified expert for mold damage in interiors by TÜV G. He is also a member of the German Association of Property Experts (Deutscher Gutachterverband). He is also a member of the Deutscher Gutachter- und Sachverständigenverband and the Bundesverband Deutscher Sachverständiger und Fachgutachter. Against this background, the Senate has no doubt that he is sufficiently qualified to assess the remaining useful life of the property in question on the basis of the ImmoWertV.
Whether an expert opinion is only suitable for proving an actual shorter useful life of a property if the expert has inspected the property himself on site - which the Senate is inclined to do, as an expert opinion is only proper if the actual basis for the appraisal has been sufficiently collected and documented by the expert - can be left open in the case in dispute, as the expert D has in any case made up for the on-site visit. In doing so, he established that the property had the level of modernization that he had already recorded in the expert opinion.
2 The decision on costs follows from Section 136 (1) sentence 1 FGO - taking into account the points originally also in dispute in the action and the partial relief already granted by the decision of 13.12.2024. The costs did not have to be imposed otherwise in accordance with Section 137 sentence 1 FGO. It is true that the plaintiff first asserted the assumption of a shorter remaining useful life of the property B-straße in the legal proceedings and also only submitted the expert opinion on the remaining useful life in the legal proceedings. However, as the further course of events has shown, an earlier assertion and submission of the expert opinion would not have avoided the legal proceedings.
3. the decision on provisional enforceability is based on §§ 151 Para. 3, 155 FGO in conjunction with §§ 708 No. 10, 711 of the Code of Civil Procedure.
4. the appeal on points of law was not admissible. The case is neither of fundamental importance (§ 115 Para. 2 No. 1 FGO) nor does the further development of the law or the safeguarding of uniform case law require a decision by the BFH (§ 115 Para. 2 No. 2 FGO). It is a case-by-case decision based on generally recognized principles of case law. The fact that the BMF assumes other principles in its letter dated 22.02.2023 does not in itself constitute grounds for appeal (see BFH decision dated 18.03.2010 - IX B 227/09, BFHE 229, 177, BStBl II 2010, 627, para. 4, with further references).