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sprengnetter - "These court decisions will let landlords save money in the future".

Private landlords often give away up to €5,000 a year through their ignorance. The possibilities offered to private landlords by recently passed rulings are not yet known even to most tax advisors: In order to save too high amounts in the future, they can increase the so-called depreciation rate. The amount of depreciation, known under tax law as Absetzung für Abnutzung (AfA), is determined by the useful life of a fixed asset.

The provision of Sec. 7 (4) Sentence 2 EStG basically gives taxpayers the right to choose whether they are satisfied with the typified depreciation rate according to Sec. 7 (4) Sentence 1 EStG (50-year useful life for buildings from 1925 onwards) or whether they have the actual shorter useful life determined by an expert opinion. The period of depreciation can be significantly shortened in many cases and tax benefits can be claimed in this way.

The recently published ruling of the Cologne Fiscal Court (file number 6 K 923/20) in this regard followed, among other things, the ruling of the Federal Fiscal Court from 2021 (file number IX R 25/19) in the same matter.

In the ruling of the Federal Fiscal Court, the useful life within the meaning of Section 7 (4) sentence 2 EStG is defined in accordance with Section 11c (1) EStDV as the period during which a building can probably be used in accordance with its intended purpose. The useful life to be estimated in this context is determined by legal circumstances, economic depreciation and technical wear and tear. As a rule, the technical useful life is to be used as a basis - the period during which the asset, i.e. the existing property, is technically subject to wear and tear. If the economic useful life is shorter than the technical useful life, the taxable lessor may rely on the latter.

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