Owned or rented
If you use your own property exclusively for your business, it belongs to business assets. In the case of mixed business and private use, you must first assess asset labelling and any potential splitting; ownership alone does not make the entire property a business asset. You place the property on the balance sheet at purchase value. You do not deduct these costs immediately, but via annual depreciation. Ongoing costs such as maintenance, insurance and energy are deducted annually for the business part.
If you rent business premises, you do not depreciate the property itself. You record the rent and running costs as expenses. If you make a lasting investment in rented premises, that investment may be a separate business asset which you depreciate. If you use part of the property privately, assess which costs and assets belong to the business. For a home office additional terms apply.
How do you determine depreciation?
You determine depreciation using fixed components. The purchase value consists of the purchase price plus costs such as notary, estate agent and transfer tax. VAT only counts if you cannot reclaim it.
You then determine the value of the land. You don't depreciate over land. Only the building is depreciable. You base the division between land and building on objective data such as an appraisal or deed of sale.
You set a residual value. This is the value the building still has at the end of its use. You do not write off this value. Finally, you determine the useful life. This is the period during which you use the building within your company.
Calculating the amount of depreciation
You calculate the annual depreciation by dividing the depreciable value over the useful life. The depreciable value consists of the acquisition value of the building without land and without residual value.
You start depreciating as soon as you bring the premises into use. If you do not use the premises for the whole year, you apply the depreciation pro rata. The depreciation reduces the taxable profit. The effect on the income tax payable depends on your overall tax position.
Write down to the floor value
You are not allowed unlimited depreciation. A floor value applies. For income tax purposes, this is equal to the WOZ value of the property. Once the book value reaches this level, depreciation stops.
This may mean that you stop depreciating the asset earlier than you would based on its useful life. If the WOZ value falls at a later date, further depreciation allowance may become available. The transitional arrangement applies only to a building that was taken into own use before 1 January 2024 and on which less than three years’ depreciation had been claimed at that time. For up to three years after the building was taken into use, you may continue to use the old minimum value of 50% of the WOZ value. After that, the full WOZ value applies. See the rules for depreciation of commercial property.
WOZ value
The WOZ value is determined annually by the municipality. This value forms the minimum carrying amount for depreciation. If the WOZ value is higher than the carrying amount after depreciation, you must limit the depreciation. The floor value is a fiscal lower limit and is different from the land value or the estimated residual value. For the 2026 tax return, you use the WOZ value with a value reference date of 1 January 2025.
VAT on business premises
If you buy a property with VAT and use it entirely for VAT-taxed sales, you may reclaim the VAT. The purchase value for depreciation purposes then excludes VAT.
VAT and transfer tax have separate rules and exemptions. A VAT-exempt purchase does not automatically mean that transfer tax is always payable. Payable transfer tax and non-deductible purchase VAT form part of the acquisition costs; you do not depreciate the land component. The Tax authorities clarify purchase costs and business assets.
For maintenance and refurbishment, deduct VAT in proportion to business and taxed use. If the use changes within the review period, you correct previously deducted VAT. For rentals, the rent is usually exempt from VAT. In specific situations, you can opt for taxed rentals in case of almost fully taxed VAT use by the tenant.
Sample calculation of depreciation
You assume the following data:
- total purchase value €260000
- land value €60000
- value of the building €200000
- residual value €20000
- useful life 40 years
The depreciable value of the building is:
€200000 - €20000 = €180000
The annual depreciation is:
€180000 ÷ 40 = €4500
Suppose that in a later year the carrying amount of building and land combined is €242,000 and the applicable property tax (WOZ) value is €240,000. The normal depreciation is €4,500, but the room up to the floor value is only €242,000 − €240,000 = €2,000. You therefore depreciate a maximum of €2,000 that year and end up at €240,000. This example assumes that the transitional arrangement no longer applies.
Maintenance or investment?
Work that maintains the property in its existing condition may be maintenance recorded as an expense for the year. A lasting extension or improvement may be an investment that you capitalise and depreciate. Split a renovation invoice by the work performed rather than assessing only the total amount.
Whether you can also claim investment deduction in addition to depreciation must be assessed separately. Land is excluded, and restrictions apply to residential properties, among other assets.
