Jahressteuergesetz 2022 (Law of 2022 amending the tax law): Important changes for real estate owners
> December 2022

The Jahressteuergesetz 2022 (Law of 2022 amending the tax law) was published in the federal gazette on 20 December 2022. The most important changes will become effective as of 01 January 2023. One amendment of the Bewertungsgesetz (Valuation Act) may lead to significant disadvantages in inheritance and gift tax for gratuitous property transfers. On the other hand, a planned tightening of real estate depreciation was not enacted.
The Jahressteuergesetz 2022 (Law of 2022 amending the tax law) includes amendments to the Valuation Act that may lead to a significant increase in real estate valuations as of 01 January 2023. Initial test calculations by tax consultants show increases in value of more than 50% in some cases. Real estate valuations according to the Valuation Act are in particular the basis for calculation of inheritance and gift tax and therefore have a significant impact on gratuitous transfers of real estate, e.g. by way of anticipated succession.

The Valuation Act comprises the different methods for property valuations. As a result of the amendment, two of them, the capitalised earnings value method and the net asset value method will be adjusted to the changed economic environment, such as the general increase in the value of real estates and the development of interest rates. These two valuation methods apply to all built-up plots except for detached and semi-detached houses. The net asset value method is only applied to those in exceptional cases.

Whether a transfer will be assessed according to the old or the new valuation rules is generally determined by the date of the transfer agreement’s notarisation.

Furthermore, the rules regarding depreciation of buildings (in German known as Gebäude-AfA) were changed. In order to facilitate the building of residential properties the possible percentage for depreciation for buildings built after 31 December 2022 was increased from 2% to 3%. Also, in the future it will be possible to prove that the total usage period for a building is shorter than the typical usage pe-riod foreseen by the legislator, thus leading to a higher percentage for depreciation. In earlier drafts of the act this possibility was ceased. With this plan the legislator favoured real estate valuators a short time boom.
> Bundesanzeiger, Jahressteuergesetz 2022 (JStG 2022)