Purchase price allocation: how much of the purchase price can you depreciate? – explained

For let properties, only the building share of the acquisition costs is depreciated; land does not wear out (§ 7(4) EStG). The size of the building share determines the tax depreciation – year after year. In about four minutes, this video explains how the purchase price is allocated and when an appraisal is worthwhile.

What you will learn in the video

• Purchase contract: An agreed allocation generally applies if it does not fundamentally miss the real value ratios (BFH IX R 12/14).
• Calculation tool: The tax office often uses the BMF calculation tool – it is not binding on the courts (BFH IX R 26/19 on the earlier version).
• Worked example: 600,000 € purchase price: a 30 % building share results in 3,600 € tax depreciation, 45 % in 5,400 € – a difference of 1,800 € per year.
• Appraisal: land value from the standard land value and the characteristics of the plot, building value using the appropriate method – reasoned and verifiable.
• In practice: ideally agree the allocation before the notary appointment; an appraisal is also possible later, for example in objection proceedings.

Legal basis and sources (as of 9 October 2026)

• § 7 EStG – tax depreciation (AfA)
• BFH, judgment of 21 July 2020 – IX R 26/19 – calculation tool for purchase price allocation not binding
• BFH, judgment of 16 September 2015 – IX R 12/14 – contractual purchase price allocation
• § 347 AO – objection
• Section 194 BauGB – market value

This video is an information and promotional video of the real estate appraisal office STRECKEL for its own services. It provides general information, is not tax or legal advice and replaces neither advice from a tax adviser nor an appraisal of your property. Examples are simplified.