Building Renovation; Applying for a Certificate for Tax Purposes

The costs associated with the maintenance and repair of buildings in designated redevelopment areas or urban development zones can be reduced, in some cases significantly, through tax incentives.

To claim tax incentives for modernization and repair measures within redevelopment areas and urban development zones, a certificate from the municipality must be submitted to the tax authorities.

This certificate is issued by the relevant municipality upon request. Tax professionals can provide comprehensive advice on the details of potential tax incentives.

Measures that result in the construction of a new building are not eligible for tax incentives.

Construction costs for (building) measures, as well as grants from redevelopment or urban development funds, must be specified in the application.

Construction costs for modernization and repair measures, minus any grants, may be deducted in the year of construction and in each of the following seven years at a rate of up to 9%, and in the subsequent four years at a rate of up to 7%.

For properties used to generate income, maintenance expenses may, at the taxpayer’s request, be deducted over a period of two to five years instead of in a single year. For owner-occupied properties, the construction costs may alternatively be deducted as special expenses at a rate of 9% over a period of ten years.

The certificate may only be issued for modernization and repair measures within designated redevelopment areas and urban development zones.

Before construction begins, the redevelopment area or urban development zone must be formally designated, and either a modernization or repair mandate must have been issued by the municipality, or a written agreement regarding the modernization or repair mandate must have been concluded between the owner and the municipality. If individual construction projects have already been carried out, a certificate cannot be issued.

The certificate must be applied for at the relevant municipality.

As part of the certification process, the relevant municipality verifies whether the building is located in a formally designated redevelopment area or urban development zone, whether modernization and repair measures have been carried out, the amount of expenses incurred, and the extent to which grants from public funds have been approved.

The certificate issued by the municipality is to be submitted to the competent tax authority for the purpose of reviewing the tax-related depreciation.

• The following documents are required:
  
  • Existing Plans
  • Plans with the measures noted
  • Modernization or Repair Order or Agreement
  • Original invoices (final invoices)

25 to 600 EUR

administrative lawsuit