Listed historic properties – all relevant facts at a glance

Historically relevant buildings and cultural monuments shape the identity of our cities. They have significant economic importance and receive special consideration under monument protection law. Owners of listed properties are obligated to maintain them, but they also enjoy benefits that make acquiring monuments attractive. Here you can find all the important information regarding historic preservation for real estate.

What are architectural monuments?

Monuments are buildings or only parts thereof which, because of their historical, artistic, urban planning, scientific, or folkloric significance, should be protected in a special way in the public interest (see Art. 1 Bavarian Monument Protection Act).

Facts worth knowing about the Monument Protection Act

The care and administration of listed historic properties have been transferred by the federal government to the individual federal states. As a result, each federal state has its own monument protection law with an independent authority. The monument protection authorities administer all architectural monuments located within their respective administrative areas. They issue structural preservation orders and requirements that obligate property owners. Mostly, these requirements relate to construction measures such as renovations, modernizations, refurbishments, or expansions as well as conversions of the historic properties.

This is about preserving the overall historical appearance of the property. Therefore, the appearance of the buildings is primarily affected by regulatory requirements. In addition, the use of listed historic properties may be restricted. For example, the historic preservation authority can prohibit a listed manufacturing building from being rented out as residential property. Real estate owners must expect that even minor measures may be prohibited, especially if they alter the overall historical appearance. This can affect, for example, fences, motion detectors, or outdoor lighting.

Once a property has been placed under historic preservation, permission from the competent authority is always required for the removal or alteration of any protected part of the building. This concerns both the interior and the exterior of the historic property. Historic properties that are suitable for residential purposes are in high demand as investment properties.

Historic properties offer tax benefits for owners

Both for capital investors and owner-occupants, listed historic properties can be an advantageous investment because they are associated with tax benefits. Renovation or refurbishment costs can be deducted from income tax due to the monument-Afa (special depreciation). For rented properties, capital investors benefit from depreciation amounting to 100 percent of the renovation costs. Owner-occupied properties allow for straight-line depreciation of 90 percent over ten years.

The age of the property plays an important role. For historical monuments built before 1924, the acquisition costs can be depreciated at 2.5 percent annually. The term of the straight-line depreciation for these properties is 40 years in total. Listed properties built later allow 2 percent of the acquisition costs to be depreciated over 50 years. Before acquiring a listed property, it is advisable to seek professional advice. Also, speak with your tax advisor to find out whether it is advantageous for you to invest in a listed property.

Investments in modernization and maintenance can only be taken into account for income tax purposes after the purchase of the real estate. Otherwise, the tax office will not classify the measures as income-related expenses, but will attribute the costs to the purchase of the property within the meaning of acquisition costs.

Energy-efficient renovation and historic preservation

Owners of historic preservation properties can take advantage of tax benefits when renovating the roof, facade, windows, and installing a new heating system. Official requirements can become a challenge for homeowners because they often conflict with necessary modernizations. This is because any changes to properties listed in a heritage register require approval.

For listed historic properties, two funding programs have been offered by the KfW (Kreditanstalt für Wiederaufbau) since July 1, 2021. These are the „Efficiency House Historic Building“ program, which offers a (repayment) subsidy per residential unit of 25 percent for a maximum loan amount of 120,000 euros. For the second program, the „Efficiency House Historic Building EE Class,“ this value increases to 30 percent for a maximum of 150,000 euros. Thus, the maximum subsidy is 45,000 euros per residential unit. Since the requirements are set lower than for a regular efficiency house, more owners can take advantage of this historic preservation funding. The subsidies contribute to the appreciation of the property, which is why they should be seriously considered by owners.

Because the requirements for historic preservation properties regarding energy efficiency are not comparable to other real estate, heritage-protected houses do not require an energy performance certificate.

What advantages and disadvantages are associated with purchasing a listed historic property?

Listed buildings offer owners attractive tax relief because special depreciation allowances are possible. Rehabilitation costs and renovation costs are tax-deductible. Special expenses can also be claimed. In addition, low-interest loans and subsidies from the KfW can be utilized. Rental income is generally higher because the demand for period properties is very high. Thus, landlords usually do not have to worry about vacancies. This makes historic preservation properties a good capital investment. Furthermore, the appreciation in value of listed buildings has a positive effect upon a later sale and should not be underestimated.

Listed properties also come with disadvantages, and it is important for investors to be aware of these so that the investment is a success. The costs for renovation and Maintenance are significantly higher, because the requirements of the heritage conservation authority must be observed. In addition, maintenance costs are often high (for example heating costs) because not all energy-saving measures can be implemented. Basically, owners of listed properties should be aware that all measures on the property require approval. Owners of architectural monuments are obliged to always keep their properties in a good condition.

The restrictions and requirements of the authorities can also affect renting. To assess the risks of the intended investment, it is therefore important that investors inform themselves sufficiently before purchasing a listed historic property. Only in this way can they make the right decision regarding the intended investment.

Which documents are important for purchasing a listed historical property?

If you have decided to purchase a historic monument, it is necessary to examine and review the documents of the historic property. You should Land Register, the Deed of partition as well as carefully reading the property description. Inquire about obligations and any potential Maintenance costs, that might come your way. As Real estate agent we review all sales-relevant documents and make them available to the prospective buyers. Ultimately, the documents are also important for the lenders when they have to decide on granting a loan.

Contact us if you want to know the value of your listed property.

Do you own a listed historic property and are you thinking of selling it? Then do not hesitate to contact us to address. We would be very happy to create one for you. Real estate appraisal. We provide individual advice and take the time for your concerns. As a married couple, we have been active in the Munich real estate market since 2004. Our actions are always shaped by high ethical and moral values. We are committed to dedicating ourselves to your property every single day with dedication and consistency. When selling, we achieve the best possible purchase price. We look forward to, to hear from you.