The German Cabinet has approved a tax incentive bill intended to encourage the construction of new affordable-rent apartments to address a growing housing shortage in Germany.
According to the Finance Ministry, the Bill provides for the introduction of a special temporary depreciation scheme for the construction of new rental housing in areas where the housing market is “strained.” Those eligible for the tax break will be able to deduct almost one-third of their construction costs over a three-year period.
In order to prevent the scheme being used for the building of luxury apartments, homes with a construction cost in excess of EUR3,000 (USD3,340) per square meter will not qualify for the tax incentive. Tax claims will be capped at EUR2,000 per square meter for private investors. New homes must also be constructed within designated areas. The scheme will be available to builders obtaining construction permits from 2016 through 2018.
While there was already a shortfall of low-to-mid rent homes in certain urban areas of Germany before the migrant crisis began, the situation has been made acute since more than 1m migrants arrived in Germany last year. An additional 800,000 refugees and asylum seekers are expected to arrive in 2016.
“The housing market in Germany is tense in some regions, especially in the large cities lacking apartments,” said Finance Minister Wolfgang Schäuble. “We now need to set the right incentives and promote the construction of new apartments.”
Source: Tax-News.com
