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Land component in a rented condominium
The Federal Fiscal Court (Bundesfinanzgericht, BFG) has confirmed that the proportion of land and buildings in a rented condominium does not have to be set at a flat 20% under the land‑component regulation when the actual circumstances differ significantly.
For buildings that are used to generate income from renting and leasing, a depreciation of 1.5% of the assessment base can be claimed, without the need to provide evidence of the useful life. In determining the assessment base, the ratio between the building and the land is decisive, as land may not be depreciated, whereas the building may. The lower the land component, the higher the depreciation. In principle, between 20% and 40% (depending, among other things, on the population of the relevant municipality) must be separated from the acquisition costs as the land component. The land‑component regulation provides a presumption of the ratio, which can be disproved by evidence.
Decision of the Federal Fiscal Court (Bundesfinanzgericht, BFG)
According to the Land‑Component Regulation 2016, the flat allocation ratio may be deviated from if a manifest substantial deviation is demonstrated. Such a deviation exists when the actual value differs by at least 50% from the flat value and this deviation is evident, i.e. detectable without a special investigative procedure, special expertise and without any difficulty.
In a case decided by the BFG, the deviation was clearly established through the calculations of the developer company, purchase contracts and price comparisons. A land value of EUR 950 per m² was not remotely realistic. The actual data indicated a land component of at most 10%. In this sense, the BFG amended the tax office's assessment and set the land component at 10% (EUR 470.00 per m²).
Decision of the Federal Fiscal Court (Bundesfinanzgericht, BFG)
According to the Land‑Component Regulation 2016, the flat allocation ratio may be deviated from if a manifest substantial deviation is demonstrated. Such a deviation exists when the actual value differs by at least 50% from the flat value and this deviation is evident, i.e. detectable without a special investigative procedure, special expertise and without any difficulty.
In a case decided by the BFG, the deviation was clearly established through the calculations of the developer company, purchase contracts and price comparisons. A land value of EUR 950 per m² was not remotely realistic. The actual data indicated a land component of at most 10%. In this sense, the BFG amended the tax office's assessment and set the land component at 10% (EUR 470.00 per m²).