Shortened remaining useful life: How qualified appraisals increase depreciation, specify the capitalised earnings value and secure transactions despite the stable legal situation

Law remains stable: Why shortened remaining useful life appraisals are now particularly in demand

Reliability counts in turbulent markets. This is exactly where the good news comes in: The legal guard rails for shortened remaining useful life (RND) remain unchanged - and thus the possibility of proving the actual useful life of a building by means of a qualified expert opinion. This is a strategic lever for owners, buyers and investors: if the legal framework remains unchanged, you can leverage tax potential, stabilise cash flows and secure transactions with reliable documentation.

What does „shortened remaining useful life“ mean in practice?

The remaining useful life describes how many years a building can be used, taking into account its actual the structural condition, construction method and state of maintenance can be utilised in an economically viable manner. For tax purposes, it has an effect on building depreciation (AfA): If the RND is shorter than the flat-rate assumptions, a higher amount can be depreciated per year (with appropriate evidence). In the valuation (income capitalisation approach), the RND also influences the multiplier and thus the building value component - a key point for commercially sound pricing.

Why demand is now increasing - despite the unchanged legal situation

Precisely because the legal framework remains stable, the importance of well-founded RND reports is increasing. There is planning certainty: tax offices continue to accept qualified, individualised evidence instead of flat-rate table values or general working aids. At the same time, many existing properties are facing investment decisions (refurbishment backlog, energy efficiency, conversion). Investors want clarity on how the condition affects tax depreciation and returns. In times of higher financing costs, a well-founded expert opinion strengthens the basis for argumentation - vis-à-vis the bank, buyer and tax office.

Typical reasons for shortened remaining useful life appraisals

• Visible maintenance backlogRoof, façade, pipes, heating - when essential components have reached the end of their service life.
• Above-average wear and tearFor example, heavy commercial use, high frequency, moisture damage or structural defects.
• Older existing buildings with partial modernisation: core components that have not been refurbished shorten the remaining service life despite new bathrooms/floors.
• Location-related restrictionsNoise, emissions or utilisation requirements can have an (indirect) economic impact on the RND.
• Planned change of use: In the case of conversion (e.g. office to residential), the current RND of the portfolio may be relevant.
• TransactionsBuyer checks tax and yield effects, seller secures documentation for due diligence.

What characterises a reliable RND report

• Qualification of the expert (e.g. certified/publicly appointed or equivalent verifiable).
• Transparent methodologyBuilding description, building age classes, catalogue of building components (roof, facades, windows, pipes, supporting structure, building services), valuation approach and derivation of the RND.
• Extensive photo documentation and reproducible recording of findings.
• Property/building demarcation and clear identification of the assumptions (e.g. current condition, no immediate total refurbishment).
• Consistency with valuation (income value/determination of modernisation backlog, remaining economic life).
• Preparation suitable for tax authorities incl. date and object reference, signature, list of attachments.

Practical tips: How owners and investors proceed in a structured way

• Bundle documents: Plans, building description, energy performance certificate, refurbishment invoices, maintenance logs, photos (close-ups).
• Component checklist create: Structure, roof, façade, windows, pipes, heating, lifts, fire protection - condition, year of construction, last renovation.
• Investment planning outline: What measures are foreseeable (costs, timing)? This supports the derivation of the RND.
• Note the timing: Obtain an expert opinion before the tax return or bank meeting in order to report figures consistently.
• Coordination with tax consultants: Clarify eligibility for recognition, application of AfA and scope of documentation.

Value, return and communication - what brokers bring to the table

A professional team of estate agents combines a property transaction with reliable documentation. A good RND appraisal pays off Price realism, Financing capability and Tax planning a. For sellers, it reduces subsequent renegotiations; for buyers, it improves costing certainty and can increase after-tax returns. Consistent communication is crucial: condition, investment path and economic useful life must match.

Briefly illuminated: Effect on capitalised earnings value and depreciation

A shorter remaining useful life can influence the building value in the capitalised earnings value method because the multiplier decreases. This is not a disadvantage, but Transparency about the actual condition - and the basis for sustainable prices. At the same time, higher depreciation can be applied for tax purposes if the tax office recognises the expert opinion. Result: realistic valuation plus potentially improved liquidity due to a lower tax burden. Important: The effect depends on the property and the point in time; have the figures checked individually.