Proof of shorter building usage period for commercially leased buildings

Oct 30, 2025

The Munich Finance Court (FG) had to decide whether, in the context of the long-term commercial letting of two buildings as refugee accommodation for a period of 10 years, a reduced useful life with an annual depreciation rate of 10% was applicable or whether the standard useful life of 50 years with an annual depreciation rate of 2% should be assumed. The tax office assumed a useful life of 50 years.

The plaintiff argued that the economic useful life of the refugee accommodation was in fact limited to the term of the rental agreements – 10 years. The investment calculation was based on this assumption, as subsequent use was uncertain, in particular conversion back into a hotel business. The plaintiff submitted an expert opinion from a publicly appointed expert, which estimated the remaining useful life at 10 years.

The tax office, on the other hand, took the view that a shortened useful life had not been proven, as the expert opinion submitted had not considered any alternative use. Without proof of an exceptionally shorter useful life, the statutory depreciation rate of 2% per annum would remain applicable. If the forecast was uncertain, the burden of proof lay with the plaintiff.

A court opinion was then obtained during the legal proceedings. This concluded that both buildings could be used for at least 10 years. For one of the buildings, subsequent use was possible in principle, as demand from the public sector could not be ruled out. The opinion did not specify that use would end after 10 years.

For the second building, the expert saw a high probability of subsequent conversion to a bed and breakfast hotel, as there was demand on the market. Economic continued use beyond 10 years was possible.

On the basis of the court expert opinion, the FG did not recognise a shortened useful life for either building. The statutory depreciation rate of 2% per annum therefore remained unchanged. As the burden of proof for a different assessment lay with the plaintiff and she was unable to provide sufficient evidence, a depreciation period of only 10 years was not recognised.

Source: FG Munich, judgment of 10 April 2025 – AZ 10 K 1531/21