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In its judgment of 23 January 2024 (case no. IX R 14/23), the Federal Fiscal Court (Bundesfinanzhof) further developed its landmark case law on shorter remaining useful life (Section 7 (4) sentence 2 of the German Income Tax Act, EStG) in two respects: the methodology of IX R 25/19 (2021) is expressly confirmed – and the strict BMF circular of 22 February 2023 is rejected on a central point. At the same time, the judgment specifies the minimum requirements: a mere reference to ImmoWertV tables without an individual property analysis is not sufficient.
Background
Since the Federal Fiscal Court's judgment IX R 25/19 (28 July 2021), it has been established that the taxpayer may use any suitable method – a building fabric appraisal is not mandatory. The tax authorities responded with the BMF circular of 22 February 2023, which, among other things, mandated certification of the valuer under DIN EN ISO/IEC 17024 or public appointment and swearing-in. This circular was not applied by the Federal Fiscal Court from the assessment period of the disputed case onward – IX R 14/23 now provides the explicit reasoning for this.
The case
The plaintiff had received a lifelong usufruct on a rented property (office building with staff apartments and a warehouse, built in 1970) based on an inheritance contract. In 2013, she acquired a half co-ownership share from one of the heirs for €150,000.
In her 2014 income tax return, she claimed depreciation (AfA) under Section 7 (4) sentence 2 EStG over only 6 years (= approx. 16.7% annually on a building share of €122,704). The tax office only recognized the standard AfA rate of 2% (€2,455).
The Cologne Fiscal Court (Finanzgericht Köln) commissioned an appraisal report from a publicly appointed and sworn valuer (öbuv-Sachverständiger), who determined an actual remaining useful life of 19 years using the ImmoWertV methodology. The fiscal court ruled in favor of the plaintiff – and additionally recognized the capitalized value of the usufruct right extinguished by the acquisition of ownership (€332,400) as acquisition costs. The tax office (FA) filed an appeal.
The decision
The Federal Fiscal Court partially overturned the judgment and referred the case back. The central findings:
1. Freedom of method affirmed (following IX R 25/19). To demonstrate a shorter actual useful life, the taxpayer may use any expert method that appears suitable in the individual case to provide the required proof. The remaining useful life of 19 years, determined by an expert using the ImmoWertV methodology, was explicitly approved by the Federal Fiscal Court.
2. BMF circular 2023 partially rejected. The Federal Fiscal Court expressly disagrees with the BMF circular of 22 February 2023 (para. 24) insofar as it imposes excessive requirements. Unlike Section 198 (2) of the German Valuation Act (BewG), Section 7 (4) sentence 2 EStG contains no formal requirements regarding the valuer (no obligation for certification under DIN EN ISO/IEC 17024 or public appointment and swearing-in).
3. A mere reference to tables is not sufficient. A purely schematic reference to the total and remaining useful life determined on a model basis according to ImmoWertV tables is not sufficient. The appraisal report must specifically address the individual circumstances of the property – in particular, repairs and modernizations carried out or omitted (Section 4 (3) sentence 2 ImmoWertV 2021).
4. Value of usufruct ≠ acquisition costs. The capitalized value of a lifelong usufruct right is not part of the acquisition costs when the usufructuary acquires ownership of the encumbered property. Although the usufruct right is extinguished, its value does not constitute consideration paid for the acquisition of ownership (Section 889 of the German Civil Code, BGB; Section 255 (1) of the German Commercial Code, HGB). The fiscal court's judgment was overturned in this respect – and because this eliminated the basis for calculating depreciation (AfA), the case had to be referred back.
What this means for landlords
An ImmoWertV appraisal report is the royal road – if individualized. An appraisal report prepared using the ImmoWertV methodology that analyzes the specific property (year of construction, construction method, modernization status, defects, location) is the recognized standard for providing proof under Section 7 (4) sentence 2 EStG. The Federal Fiscal Court has explicitly confirmed this method twice.
No formal certification of the valuer is mandatory. In 2023, the BMF had declared DIN EN ISO/IEC 17024 certification or public appointment mandatory – the Federal Fiscal Court rejected this. What matters is professional suitability. The Münster Fiscal Court (Finanzgericht Münster, 2 April 2025, 14 K 654/23 E) confirmed this principle. The BMF ultimately fully revoked the strict 2023 circular effective 1 December 2025.
No standard templates. Appraisal reports that merely copy table values are not recognized. An expert assessment of the actual circumstances is required: What modernizations were carried out and when? What defects exist? What is the structural quality of the building?
Caution regarding usufruct. Anyone acquiring a property subject to usufruct cannot add the capitalized value of the usufruct to the acquisition costs. This directly affects the basis for calculating depreciation (AfA).
