Renovation soon after buying a German property — the 15% rule

Sources and assumptions

• gesetze-im-internet.de — EStG § 6 Abs. 1 Nr. 1a Satz 1 — tax year 2026, verified on September 28, 2026

  Excerpt from the source : « wenn die Aufwendungen ohne die Umsatzsteuer 15 Prozent der Anschaffungskosten des Gebäudes übersteigen (anschaffungsnahe Herstellungskosten) »

• gesetze-im-internet.de — EStG § 6 Abs. 1 Nr. 1a Satz 1 — tax year 2026, verified on September 28, 2026

  Excerpt from the source : « Aufwendungen für Instandsetzungs- und Modernisierungsmaßnahmen, die innerhalb von drei Jahren nach der Anschaffung des Gebäudes durchgeführt werden »

Calculation assumptions

• Only the building's acquisition cost is entered, excluding land; the tool does not split the purchase price.
• Renovation costs are entered net of VAT, as the statute requires for the threshold. The VAT paid on them that cannot be deducted as input tax — the usual case when letting residential property — is entered separately: it does not count towards the threshold, but it forms part of the construction costs or of the immediately deductible expenses shown (s. 9b(1) Income Tax Act).
• Extensions within s. 255(2) sentence 1 of the Commercial Code are excluded: they are always construction costs and do not count towards the threshold.
• For rental income the rule applies by virtue of s. 9(5) sentence 2 of the Act.
• The rule concerns only buildings used to earn income (business assets or letting). For a home you occupy yourself, none of these amounts is deductible (s. 12 no. 1 Income Tax Act).