Historic Preservation

Historic Preservation - Historic preservation refers to the legal protection of buildings that are classified as historic monuments due to their historical, artistic, scientific, or urban planning value and are listed on the register of historic monuments.

What exactly does historic preservation mean?

The legal basis for historic preservation is provided by the historic preservation laws of the individual federal states. In Bavaria, the Bavarian Historic Preservation Act (BayDSchG) applies. Enforcement is the responsibility of the lower historic preservation authorities within the district administrative authorities, as well as the Bavarian State Office for the Preservation of Historical Monuments as the specialized authority. A building becomes a historic monument when it meets the legal criteria and is entered into the list of historic monuments. In Bavaria, the so-called notification system applies: A building is already a historic monument by law if it meets the requirements; entry into the list of historic monuments is merely declaratory in nature.

For owners of listed properties, this results in a permit requirement for nearly all structural alterations. Renovations, additions, restorations, and even work on the facade, windows, or roof must be coordinated with the historic preservation authority in advance. The authority reviews whether the planned measures are compatible with the building’s historic character and may impose conditions or require changes. Violations of the permit requirement may be punished as administrative offenses.

In addition to the obligations, however, historic preservation also offers significant advantages. Owners can claim special tax depreciation under Sections 7h, 7i, and 10f of the Income Tax Act (EStG), known as historic preservation depreciation. Investors can fully depreciate the recognized renovation costs over twelve years, while owner-occupiers can claim 90 percent as special expenses over ten years. In addition, various subsidy programs are available, such as the compensation fund of the Free State of Bavaria, municipal grants, and low-interest KfW loans for energy-efficient renovations of historic buildings.

Owners of listed buildings are subject to a duty of preservation. They must maintain the historic building and may not allow it to fall into disrepair. However, this duty applies only within the bounds of economic reasonableness. If an owner can demonstrate that the preservation costs permanently exceed the economic benefits, a demolition permit may be granted in exceptional cases.

Requirements and Approval Procedures

The approval process for listed buildings differs significantly from regular building permits. In addition to the building application submitted to the building authority, a permit under monument protection law must be applied for from the lower monument protection authority. The Bavarian State Office for Monument Preservation is involved as the specialized authority and issues an opinion. In practice, we recommend consulting with the authorities as early as the planning phase to coordinate the measures and avoid costly redesigns.

Typical requirements concern the use of historically appropriate building materials, the preservation of original architectural elements such as stucco ceilings, wooden staircases, or natural stone facades, as well as the exterior design regarding color schemes, window shapes, and roofing materials. Modern energy efficiency requirements must be reconciled with historic preservation, which often leads to compromises when it comes to facade insulation or window replacement.

Overview of Historic Preservation Depreciation - Comparison of Tax Benefits

Feature	Investor (Rental)	Owner-Occupier	Legal Basis
Depreciation base	Recognized renovation costs (100%)	Recognized renovation costs (90%)	Sections 7i, 10f of the German Income Tax Act (EStG)
Depreciation period	12 years	10 years	Sections 7i(1), 10f(1) EStG
Annual depreciation rate	9% in years 1-8, 7% in years 9-12	9% p.a. over 10 years	Section 7i(1) sentence 1 EStG
Type of tax benefit	Income-related expenses (Section 21 EStG)	Special expenses	Sections 21, 10f EStG
Prerequisite	Approval + certification by the historic preservation authority	Approval + certification	Section 7i(2) EStG
Example: Renovation costs €200,000	€200,000 deductible	€180,000 deductible	-
Tax savings (marginal tax rate 42%)	approx. €84,000 over 12 years	approx. €75,600 over 10 years	-

Note: Depreciation requires prior written approval from the historic preservation authority. Measures approved retroactively are not recognized for tax purposes.

Practical Tip for Property Owners in Nuremberg and Franconia

Despite severe war damage, Nuremberg boasts a remarkable stock of historic buildings. The Old Town with the Imperial Castle, the Handwerkerhof, the historic suburbs of St. Johannis and Gostenhof, as well as the Wilhelminian-style neighborhoods in Maxfeld and Uhlandstraße are home to numerous architectural monuments. The neighboring city of Fürth, which boasts one of Germany’s best-preserved Wilhelminian-style ensembles, and the UNESCO World Heritage site Bamberg also have particularly extensive collections of historic buildings.

Anyone wishing to purchase or renovate a listed property in the region should first consult the Bavarian List of Historic Monuments at the State Office for the Preservation of Historic Monuments and contact the local historic preservation authority of the respective city well in advance. Our network of experts also recommends consulting an architect specializing in historic properties who has experience with the authorities’ requirements and can calculate realistic renovation costs.

Frequently Asked Questions

What are the obligations of the owner of a listed building?

Owners are obligated to preserve the historic building in its current state and to maintain it with due care. Any structural alteration, even if it would not normally require a building permit, requires approval under historic preservation law. The obligation to preserve applies within the bounds of economic reasonableness. In return, owners have access to tax breaks and subsidies that can offset a significant portion of the additional costs.

Can I perform an energy-efficient renovation on a historic building?

Energy-efficient renovation is possible but must be coordinated with the historic preservation authority. Interior insulation instead of exterior insulation, period-appropriate windows with insulated glazing, and modern heating technology are generally eligible for approval. Additionally, historic properties are subject to exemptions from the requirements of the Building Energy Act (GEG) if the measures would impair the structure or the building’s appearance.

What tax benefits does a historic property offer?

Investors can fully depreciate the recognized renovation costs over twelve years (9% annually for eight years, 7% annually for four years). Owners-occupiers can claim 90 percent of the renovation costs as special deductions over ten years. This requires prior approval from the historic preservation authority and a certificate upon completion of the work. The tax benefit can be very significant in cases of high renovation costs and a high tax rate.

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