Neubau (new build)

What “Neubau” actually means in tax terms

The investor question is rarely about the building's age in marketing terms. It turns on two dates: the Bauantrag (construction application) date, which sets the linear and Sonder-AfA §7b treatment, and the Baubeginn (construction start) date, which governs the degressive AfA. Together they decide which depreciation routes are open.

For residential rental property with a Bauantrag filed from 1 January 2023 onwards, the linear AfA rate is three percent per year over a thirty-three-year period. For pre-2023 stock, the rate is two percent over fifty years.

For most current new builds, though, the more relevant route is the degressive AfA. Where construction began between 1 October 2023 and 30 September 2029, the law allows five percent per year taken on the declining balance rather than the flat building cost. In year one that is five percent of the full building value; in year two, five percent of the remaining ninety-five percent, and so on. The effect is to pull a large share of the total depreciation into the first years of ownership, exactly when new-build cashflow is tightest. An investor can switch to linear AfA later, once the linear rate would give the bigger deduction. This is the depreciation route most new builds now use.

On top of either schedule, where the property qualifies for Sonder-AfA §7b, an additional five percent per year applies to the depreciable basis for the first four years. Stacked on the five percent degressive AfA, the early-year deduction can reach roughly ten percent of the qualifying basis; stacked on the three percent linear, around eight percent. After year four, the §7b ends and the underlying schedule continues.

The §7b qualification is strict. The construction must have started in the eligible window, the per-square-metre construction cost is capped (currently €5,200/m²), the depreciable basis is capped (currently €4,000/m²), and the property must meet specific energy efficiency requirements (EH40 NH or equivalent). The programme currently sunsets at the end of 2029. Detail in Sonder-AfA §7b.

Where the Neubau math typically lands

Two patterns recur in honest Neubau analyses.

First: the gross yield on a Neubau property at A-city Lage is usually meaningfully below the gross yield on equivalent-location Bestand. Pre-tax cashflow is often negative, sometimes substantially. The investor relies on the combination of AfA, principal paydown, and expected market appreciation to produce a positive after-tax outcome.

Second: the marginal tax rate is the decisive variable. The same Neubau in the hands of a thirty-percent-rate investor often produces a worse outcome than the same property in the hands of a forty-five-percent-rate investor. This is not because the property changes, it is because the depreciation is worth more in after-tax terms at higher brackets.

Bauträger-specific risks

A Neubau purchase is typically a Bauträgervertrag, a contract with a developer for delivery of a completed unit, often sold off-plan. This carries a different risk profile from a Bestand purchase:

Insolvency risk. A developer failing during construction can produce serious delays or, in worst cases, lost deposits. The Makler- und Bauträgerverordnung (MaBV) provides protections by staging payments against construction milestones, but the protections are not absolute and not all developers handle them equivalently.

Delivery risk. Construction overruns of three to twelve months are common. The interest-rate environment at handover may differ from the one when the contract was signed.

Quality risk. The unit handed over may not match the brochure on every point. Pre-handover inspection (Abnahme) is the moment to identify and document defects; once accepted without reservation, claims become harder.

When Neubau tends to fit

A few patterns appear repeatedly in cases where Neubau turns out well:

• The investor is in a higher marginal tax bracket where the depreciation produces meaningful after-tax value
• The horizon is long enough to absorb the back-loaded return profile
• The investor has done independent due diligence on the Bauträger, not relied on broker presentation
• The cashflow plan accounts for negative monthly net for the first several years
• Sonder-AfA §7b eligibility, where applicable, has been verified rather than assumed

What comes next

The next lesson covers the property archetype most often compared with Neubau: existing-stock Bestandsimmobilien, with their own trade-offs around yield, AfA, and renovation upside.