Sonder-AfA for New Builds in Germany: How Real Estate Investors Can Maximize Tax Savings
- ronaldsena
- Aug 15
- 2 min read
Germany's real estate market continues to attract investors with stable returns, low interest rates (historically), and strong tenant demand. But there's another incentive that savvy investors shouldn’t overlook: Sonder-AfA (Special Depreciation Allowance) — a powerful tax benefit designed to stimulate residential construction.
In this article, we break down what Sonder-AfA is, how it works, and who qualifies.
What Is Sonder-AfA?
Sonder-AfA is a temporary, accelerated depreciation allowance on newly constructed residential rental properties. It allows investors to depreciate an additional 5% per year for 4 years — on top of the standard linear 2% annual depreciation.
That means for the first four years, investors can claim 7% depreciation annually on qualifying new construction costs.
Why Was It Introduced?
Sonder-AfA is part of the German government’s strategy to:
Encourage the creation of new rental housing
Address the housing shortage in urban centers
Promote sustainable, energy-efficient building standards
The policy is laid out under §7b of the Einkommensteuergesetz (EStG).
Who Qualifies?
To take advantage of Sonder-AfA, the following conditions must be met:
New Construction or First-Time PurchaseThe property must be newly built or purchased newly constructed (first-time acquisition).
Rental UseThe property must be rented out for residential purposes — not for personal use or short-term rentals like Airbnb.
Construction or Purchase DeadlineThe original program applied to buildings permitted between 1 September 2018 and 31 December 2021, but recent reforms (2023/2024) have reinstated and extended this rule for certain new builds through 31 December 2026.
Cost Cap (Grenzbetrag)Eligible construction or acquisition costs must not exceed €5,200 per square meter, and only the first €4,000/m² is eligible for the Sonder-AfA.
Energy StandardsNewer reforms require buildings to meet EH-40 or EH-55 (Effizienzhaus) energy standards for eligibility.
How Does the Depreciation Work?
Here’s a simplified breakdown for a qualifying new-build residential rental:
Purchase/Construction Cost (excluding land): €400,000
Eligible for Sonder-AfA (first €4,000/m²): full amount assumed eligible
Standard AfA (2%): €8,000/year
Sonder-AfA (5%): €20,000/year for first 4 years
Total depreciation in years 1–4: €28,000/year
Depreciation from year 5 onward: €8,000/year
This aggressive early depreciation significantly reduces taxable income, especially helpful when loan interest is also high in the early years of ownership.
Advantages of Using Sonder-AfA
Accelerates tax relief in early years when cash flow may be tighter
Reduces taxable rental income, especially useful for high earners
Improves return on equity through tax efficiency
Encourages sustainable development through energy requirements
Important Notes
Land value is not depreciable — make sure your purchase contract separates land and building values.
AfA is only available for income-producing assets — personal use disqualifies you.
You must apply the Sonder-AfA starting in the first year the property is available for rent.
The allowance must be claimed in the tax return — it’s not automatic.
Final Thoughts
Sonder-AfA is one of the most attractive tax benefits for property investors in Germany — especially those focused on build-to-rent, forward deals, or turnkey new construction.
Combined with rising rents and long-term appreciation, these tax savings can significantly boost your internal rate of return (IRR). But careful planning and documentation are key — especially around energy standards and construction cost limits.
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