Allocation of purchase price for developed properties – New statutory provisions under the Annual Tax Act of 2026 (Section 6f of the Draft Income Tax Act)

If a developed property is acquired for a total purchase price, that price must be allocated—for tax depreciation purposes—between the land and the building. The practical application of this allocation has been a recurring issue before the tax courts for years. Contractual flexibility, a much-criticized Excel template from the Federal Ministry of Finance (BMF), and varied rulings by the Federal Fiscal Court (BFH) create an inconsistent picture and significant uncertainties in practice. A proposed Section 6f of the Income Tax Act (EStG) is now intended to regulate the purchase price allocation by law for the first time. The proposal contained in the 2026 Annual Tax Act (JStG) deserves critical consideration.