Calculation of the remaining useful life of a rental property

Contrary to the opinion of the tax authorities, valuations in accordance with the Real Estate Value Ordinance are also suitable for determining the remaining useful life of a rental property.

Valuation reports in which the remaining useful life of rental properties is calculated in accordance with the German Property Value Ordinance (ImmoWertV) can be used as a basis for determining depreciation. With this decision, the Münster Fiscal Court took a stand against the tax office, which did not want to recognize the expert opinion because it did not substantiate the shorter useful lives either through technical wear and tear or for economic reasons, but merely contained mathematical calculations. The ruling is based on a judgment of the Federal Fiscal Court, according to which any method for determining the remaining useful life that provides an appropriate estimation framework is permissible. Even though the ruling is legally binding, the Federal Ministry of Finance has since issued guidelines for proving a shorter remaining useful life, which impose stricter requirements on an expert opinion.