> For the complete documentation index, see [llms.txt](https://help.immodio.app/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://help.immodio.app/en/anleitung/einnahmen-und-ausgaben/aktivierung-sofortabzug-abschreibung.md).

# Capitalisation, immediate deduction and depreciation explained

A decision aid for Immodio entries: when costs are immediately deductible, when they have to be capitalised and how the later depreciation is entered.

On this page you will find help on capitalising and depreciating costs, and on deducting them immediately, in Immodio. Some costs can be recorded **immediately** as income-related expenditure or maintenance expenditure, while other costs first have to be **capitalised**. They then do not take full effect in the year of payment but only through the depreciation.

### A) Immediately deductible

**Immediately deductible** means that the expense is in principle recognised for tax as expenditure directly in the year of payment or of its being incurred. It is therefore not spread over several years and not divided up through depreciation.

That is typically the case where a measure only preserves the existing condition, remedies damage or is normal running maintenance. No new asset arises, the building is not extended and the standard is not substantially improved.

Examples of immediately deductible costs can be:

* repairing a defective window,
* replacing a damaged heating valve,
* dealing with a burst pipe,
* normal painting work,
* maintenance or smaller repairs,
* ordinary upkeep between two tenancies.

**Immediately deductible** means the following for you in Immodio:

1. You create an expense.
2. You directly select the appropriate cost category, for example "Maintenance, maintenance expenditure, tradesmen, repairs (immediately deductible as depreciation)" or "Repairs on rental properties (not recoverable from tenant)".
3. You enter the corresponding full invoice amount.
4. The expense is then assigned entirely to that year.

### B) Capitalising and depreciating

**Capitalising** means that an expense is not recognised in full as expenditure for tax straight away. Instead it is first added to the value of a building or an asset. The expenditure for tax purposes then arises only gradually through the depreciation, that is through what is known as depreciation for wear and tear (AfA).

For you in Immodio this means you do **not** simply enter the original purchase price or the original production in full as an immediately deductible expense. Instead you first check whether the expense has to be capitalised. If it does, you determine the amount to be capitalised, establish the appropriate useful life and calculate the depreciation amount for each year from it.

You then record this calculated annual amount in Immodio as a separate depreciation entry. For capitalised tangible assets you use the category **"Depreciation of tangible assets (excluding depreciation on vehicles and buildings)"** for this. This category is therefore **not** intended for the original invoice but only for the calculated depreciation amount for the year concerned.

The procedure is:

1. You check whether the expense is **immediately** **deductible** or has to be **capitalised**.
2. You determine the amount that has to be capitalised.
3. You establish **over how many years** this amount is depreciated.
4. From that you calculate the **share** attributable to **one year**.
5. You record this calculated annual amount in Immodio as a separate depreciation entry in the category "Depreciation of tangible assets (excluding depreciation on vehicles and buildings)".
6. In the first year you usually take the annual amount into account only **pro rata from the month of acquisition**.
7. In the following years you create the depreciation entry again until the capitalised amount is fully depreciated.

### This is how you determine the amount to be capitalised

The amount capitalised is not automatically the whole invoice amount. What matters is **which part of the invoice is acquisition or production cost**.

Proceed as follows:

1. First check whether capitalisation is necessary at all.\
   Capitalisation typically comes into consideration where a new asset is acquired, an existing asset is substantially improved, a building is extended or production costs close to acquisition arise within three years of buying the property. You can find an overview for your research [**here**](#where-do-you-look-up-the-useful-life).
2. Determine the part of the invoice that belongs to this capitalised asset.\
   This generally includes the purchase price or production amount and directly attributable incidental costs, for example delivery, assembly, installation, planning or necessary fitting out.
3. Deduct amounts that are not part of the basis of assessment.\
   These can include cash discounts, rebates, grants, refunds or a share of private use. Where an input VAT deduction is possible, the deductible input VAT is normally not part of the acquisition or production costs.
4. Split mixed invoices.\
   Where an invoice contains both immediately deductible repairs and components subject to capitalisation, the amounts should be recorded separately. Example: repairing a window is immediately deductible, a new balcony is subject to capitalisation.

### The formula for calculating the depreciation

For a tangible asset the following usually applies:

**Capitalised amount = purchase price + directly attributable incidental costs - rebates - grants - deductible input VAT - the share not let**

Then:

**Annual depreciation = capitalised amount ÷ useful life**

In the year of acquisition, pro rata by time:

**Depreciation in the first year = annual depreciation × (months in the first year from acquisition) / 12**

### Example

A fitted kitchen costs €6,000. Delivery and installation are already included. The kitchen is acquired in July 2026 and depreciated over 10 years.

**€6,000 ÷ 10 years = €600 per full year**

As the acquisition takes place in July:

**€600 × 6 / 12 = €300 of depreciation for 2026**

In Immodio you then enter:

* the original acquisition: the appropriate acquisition/tangible asset category
* the annual depreciation: **"Depreciation of tangible assets (excluding depreciation on vehicles and buildings)"**
* the gross amount of the depreciation entry for 2026: **€300**
* the gross amount each year from 2027 to 2035: **€600 each**
* the remaining year 2036: **€300**

In Immodio you then do not record the purchase price of €6,000 again in the depreciation category but only the depreciation amount for the year concerned.

| Year                       | The amount you enter as depreciation in the category "Depreciation of tangible assets (excluding depreciation on vehicles and buildings)" |
| -------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------: |
| 2026, acquisition in July  |                                                                                                                                      €300 |
| 2027 to 2035               |                                                                                                                                 €600 each |
| 2036, the remaining period |                                                                                                                                      €300 |

After ten years the capitalised amount of €6,000 is thereby fully depreciated.

### Where do you look up the useful life?

For movable assets the **depreciation tables of the Federal Ministry of Finance** are generally used. There you can search for the asset, for example furniture, devices, tools, machinery or office equipment.

Important sources:

* [The Federal Ministry of Finance's depreciation tables](https://www.bundesfinanzministerium.de/Web/DE/Themen/Steuern/Steuerverwaltungu-Steuerrecht/Betriebspruefung/AfA_Tabellen/afa_tabellen.html)
* [The depreciation table for generally usable fixed assets](https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Weitere_Steuerthemen/Betriebspruefung/AfA-Tabellen/Ergaenzende-AfA-Tabellen/AfA-Tabelle_AV.html)
* [Section 7 EStG on depreciation](https://www.gesetze-im-internet.de/estg/__7.html)
* [Section 6 EStG on low-value assets](https://www.gesetze-im-internet.de/estg/__6.html)
* [The Federal Ministry of Finance on computer hardware and software](https://lsth.bundesfinanzministerium.de/esth/2025/B-Anhaenge/Anhang-01/V/anhang-1-V.html)

{% hint style="info" %}
The category **"Depreciation of tangible assets (excluding depreciation on vehicles and buildings)"** is not the category for the original purchase price. There you only enter the depreciation amount calculated beforehand for the year concerned.
{% endhint %}

## A practical guide

| Question                                                                                   | The consequence in Immodio                                                                                              |
| ------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------- |
| Does the measure only preserve or repair the existing condition?                           | Usually immediately deductible maintenance expenditure. Enter the invoice in a suitable repair or maintenance category. |
| Does a new asset arise or is an existing asset acquired?                                   | Where it is not a low-value asset, capitalise it accordingly and enter the depreciation annually.                       |
| Is a building extended, substantially improved or first put into an operational condition? | Where it is not a low-value asset, capitalise it accordingly and enter the depreciation annually.                       |

## A step-by-step guide to entering capitalised tangible assets

With capitalised tangible assets there are two steps in practice.

{% stepper %}
{% step %}

### Step 1: recording the acquisition or production

First record the original acquisition or production with a suitable category for the asset acquired. Examples:

* **Business equipment** for general business equipment over €952 gross
* **Office furnishings (furniture, desks, chairs etc.)** for office furnishings over €952 gross
* **Computer, laptop, PC, tablet, smartphone, printer** for corresponding hardware over €952 gross
* **IT software and computer programs bought once** for software bought over €952 gross
* **Tools (for example a lawnmower, sweeper, hedge trimmer)** for tools over €952 gross

At 19% VAT the limit of €952 gross corresponds to the statutory limit of €800 excluding VAT.

{% hint style="info" %}
For smaller amounts for independently usable movable assets, use the category **Low-value assets** in Immodio.
{% endhint %}
{% endstep %}

{% step %}

### Calculating the annual depreciation

For the usual straight-line case you calculate as follows:

**Capitalised amount = purchase price + directly attributable incidental costs - rebates - grants - deductible input VAT - the share not let**

Then:

**Annual depreciation = capitalised amount ÷ useful life**

In the year of acquisition, pro rata by time:

**Depreciation in the first year = annual depreciation × (months in the first year from acquisition) / 12**

The basis of assessment generally consists of the acquisition or production costs including directly attributable incidental costs. These can include delivery, assembly or necessary fitting out, for example. Price reductions, grants or refunds are to be taken into account.

With VAT the following is important: as far as an input VAT deduction is actually possible, the deductible input VAT is not part of the acquisition or production costs. With typical VAT-exempt residential letting an input VAT deduction is often not possible; the VAT can then be part of the basis of assessment. Check this particularly carefully with commercial letting subject to VAT or with mixed use.

You determine the useful life on the basis of the expected operational useful life. The Federal Ministry of Finance's depreciation tables serve as an important aid here. For a completely renewed fitted kitchen in a let apartment, the Federal Fiscal Court has held that it is in principle to be depreciated as a single asset over ten years.
{% endstep %}

{% step %}

### Entering the depreciation amount as a separate expense

For the annual depreciation amount, use the following category in Immodio: **Depreciation of tangible assets (excluding depreciation on vehicles and buildings)**

This is how you make the depreciation entry:

1. Open **Income and expenditure**.
2. Create a new **expense**.
3. Select **"Depreciation of tangible assets (excluding depreciation on vehicles and buildings)"** as the category.
4. For the assignment select the **property** concerned, for example.
5. Under **gross amount** enter only the depreciation amount calculated **for this year**, **not** the original purchase price.
6. Leave **"Recoverable in the operating cost statement"** disabled.
7. Use a clear entry text, for example **"Depreciation 2026 fitted kitchen apartment 2, acquired July 2026"**.
8. Repeat this depreciation entry in the following years with the appropriate annual amount.

{% hint style="info" %}
In short: the original invoice and the later depreciation are two different things. The invoice documents the acquisition. The depreciation entry only reflects the annual share of the cost.
{% endhint %}
{% endstep %}
{% endstepper %}

## Calculating the year of acquisition to the exact month

In the year of acquisition the straight-line depreciation is calculated pro rata by time. What matters is the month of acquisition or production. One twelfth is deducted for each full month before that month.

Example:

* acquisition in July
* annual depreciation: **€600**
* the months July to December: **6 months**
* depreciation in the year of acquisition: **€600 × 6/12 = €300**

In the following year the depreciation is then **€600**, as long as there are no special circumstances.

## Buildings are a special case

The category **"Depreciation of tangible assets (excluding depreciation on vehicles and buildings)"** is **not** intended for buildings.

Where costs concern a building and have to be capitalised, they generally increase the acquisition or production costs of the building. They are then recognised for tax through the building depreciation.

In Immodio you will in future be able to record the financial data of the property or the unit for this in the "[Billing](/en/anleitung/immobilien/objekt/abrechnung-objekt.md)" area in the property or the unit. The following details are provided for:

* **of which the building share**
* **building depreciation**
* **type of depreciation**

## Production costs close to acquisition after buying a property

The 15% limit within the first three years after acquiring a building is particularly important.

Refurbishment and modernisation measures can be production costs close to acquisition where:

* the building was acquired for consideration,
* the measures are carried out within three years of the acquisition and
* the expenditure excluding VAT is more than **15% of the acquisition costs of the building**.

{% hint style="info" %}
The 15% relates only to the building share, not to the share for the land.
{% endhint %}

Example:

* the purchase price according to the split: land **€150,000**
* the building share **€300,000**
* the 15% limit is then: **€45,000**

Within the first three years costs arise for the following measures:

* windows **€18,000 net**
* the bathroom **€12,000 net**
* the electrics **€10,000 net**
* painting work **€8,000 net**

Total: **€48,000 net**

The limit of €45,000 is exceeded. The expenditure concerned can therefore be production costs close to acquisition and then does **not** belong in an immediately deductible repair category.

In such cases you then use the following category in Immodio:

**Maintenance, maintenance expenditure, tradesmen, repairs (subject to capitalisation, production costs close to acquisition)**

## What does not count towards the 15% limit

Annual routine maintenance work in particular does not count towards this 15% limit, for example:

* running heating maintenance,
* running lift maintenance,
* clearing blocked pipes,
* descaling,
* meter reading costs.

{% hint style="info" %}
Certain damage that was neither present nor latent at the time of acquisition and demonstrably arose only later, for example through a natural disaster or the culpable conduct of a third party, is likewise not part of the production costs close to acquisition.
{% endhint %}

## Capitalisation is also possible without the 15% limit

A measure can be subject to capitalisation outside the first three years or below the 15% limit as well.

**Typical cases are:**

* extending the building, for example a new balcony, a new terrace or a new dormer,
* creating a new part of a building or another building,
* putting an acquired building into an operational condition,
* a substantial improvement of the building compared with its original condition.

With residential buildings the tax authorities look in particular at four central areas of fittings for a substantial improvement:

* heating,
* sanitary installations,
* the electrical installation,
* windows.

{% hint style="info" %}
Where the standard is raised considerably in **at least** **three** of these four areas, there can be a substantial improvement. The measure can then be subject to capitalisation despite having the character of a repair or modernisation.
{% endhint %}

## Suggestions for entry texts

A good entry text helps later with the DATEV export, with queries from your tax adviser and with your own checks.

Examples:

* **Immediately deductible: repair of a heating valve, property Musterstraße 12**
* **Capitalisation: production costs close to acquisition, bathroom refurbishment, property Musterstraße 12**
* **Depreciation 2026 fitted kitchen apartment 2, acquired July 2026**
* **WEG use of the reserve 2026, roof repair unit 4**

## Keeping documents

For capitalised and immediately deductible costs, keep at least:

* the complete invoice,
* proof of payment,
* the period of the service,
* a description of the measure,
* the property, unit or fittings concerned,
* the purchase contract and the split of the purchase price for property purchases,
* the date on which possession, risk, benefits and burdens passed,
* an overview of all measures within the first three years after acquisition,
* the depreciation calculation with the useful life and the start of the depreciation,
* evidence of grants, refunds or partial private use,
* photos or documentation of the condition for larger building work.

{% hint style="info" %}
With capitalised costs in particular, it should be possible to see later what was acquired or produced, why it was capitalised, which basis of assessment was applied and which depreciation amount was entered per year.
{% endhint %}

## Sources and further information

* [The Federal Ministry of Finance circular of 26/01/2026 on distinguishing maintenance expenditure, acquisition costs, production costs and production costs close to acquisition](https://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Steuerarten/Einkommensteuer/2026-01-26-instandsetzung-modernisierung-gebaeude.html)
* [Section 6 EStG, in particular Section 6 (1) no. 1a and Section 6 (2) EStG](https://www.gesetze-im-internet.de/estg/__6.html)
* [Section 7 EStG on depreciation for wear and tear](https://www.gesetze-im-internet.de/estg/__7.html)
* [Section 9b EStG on input VAT with acquisition and production costs](https://www.gesetze-im-internet.de/estg/__9b.html)
* [The ELSTER help on annex V and depreciation](https://www.elster.de/elsterweb/helpGlobal?themaGlobal=help_est_ufa_12_2025)
* [The Federal Ministry of Finance's depreciation tables](https://www.bundesfinanzministerium.de/Web/DE/Themen/Steuern/Steuerverwaltungu-Steuerrecht/Betriebspruefung/AfA_Tabellen/afa_tabellen.html)
* [BFH, judgment of 03/08/2016, IX R 14/15 on fitted kitchens](https://www.bundesfinanzhof.de/de/entscheidung/entscheidungen-online/detail/STRE201610271/)