Increased depreciation
An increased depreciation is a special form of tax deductions for wear and tear. Under certain conditions, it can be used instead of normal depreciation . While the special depreciation does not affect the regular depreciation of an asset, it is replaced by the increased depreciation. The legal basis for increased depreciation is § 7h and § 7i EStG. The increased sales amounts result in tax relief for the taxpayer in the years in which the claim is made. Under commercial law, increased deductions are no longer permitted since the amendment to the Commercial Code as part of the BilMoG .
Increased deductions can therefore be made for construction measures that are intended for the creation of new rental apartments, provided that the building application was submitted after October 2, 1989, and the construction contract was completed before 1996. In addition, for economic goods that serve environmental protection (if built or purchased between 1975 and 1984), architectural monuments, apartments with social ties (if built or purchased between 1989 and 1996), as well as for certain construction measures within the meaning of the Federal Building Act and the Urban Development Act.
A prerequisite for the increased depreciation, however, is a contractual agreement (modernization agreement) with which the client undertakes to remedy the grievances and to remedy the deficiencies in accordance with Section 177 of the Building Code (BauGB). The basis for such a contractual agreement is that the intended redevelopment of the property corresponds to the redevelopment principles or goals of the respective formally defined area decided by the city council.
In addition to the higher deductions, no further deductions are permitted, as the higher deductions take the place of the normal depreciation. If the assessment basis for the increased deductions does not include the entire assessment basis of the asset, normal depreciation is provided for the non-beneficiary parts of the asset.
