Renovation

Renovation - A renovation encompasses all measures aimed at visually refreshing and beautifying a property without altering the building’s structural integrity or its technical systems. Typical renovation work includes painting, wallpapering, installing new flooring, and replacing fixtures or door hardware.

What distinguishes renovation from restoration and modernization?

The distinction between renovation, restoration, and modernization is not only linguistically important but also has legal and tax implications.

Renovation removes signs of wear and tear and restores the property to its original visual condition. It constitutes maintenance expenses for tax purposes: Landlords can immediately deduct the costs as business expenses. A building permit is not required for pure renovation work. Typical tasks include painting walls and ceilings, replacing wallpaper, replacing carpet, laminate, or hardwood flooring, renewing silicone caulking in the bathroom, and minor touch-ups to plaster and tiles.

Renovation goes significantly further and includes measures to preserve the building’s structure, such as updating the electrical system, replacing the heating system, or repairing moisture damage. It serves to remedy defects and damage and extend the building’s useful life.

Modernization increases value and enhances the property’s utility beyond its original condition-for example, by installing underfloor heating, a controlled ventilation system, or barrier-free bathroom fixtures. Landlords may pass on a portion of modernization costs to the rent (§ 559 BGB: up to 8% of the costs incurred per year).

Depending on the scope, renovation costs range between 50 and 200 euros per square meter of living space. This makes renovation the most cost-effective form of property enhancement-even a fresh coat of paint and new flooring can significantly increase the sale price or the achievable rent.

Renovation and Tenancy Law: Cosmetic Repairs

In tenancy law, the term “renovation” plays a central role under the heading of “cosmetic repairs.” According to the case law of the Federal Court of Justice (BGH), cosmetic repairs exclusively include wallpapering, painting, or whitewashing walls and ceilings, as well as painting floors, radiators, interior doors, and the interior surfaces of windows and exterior doors. Rigid schedules in lease agreements that obligate the tenant to perform renovations regardless of the actual condition of the apartment are invalid under established BGH case law. The sole determining factor is the condition of the apartment at the end of the lease compared to its condition upon move-in.

If the apartment was handed over unrenovated, the landlord cannot require the tenant to perform cosmetic repairs without adequate compensation. In practice, we recommend that landlords document the condition of the apartment at handover in detail with a handover report and photos-this is the only way to prove, in the event of a dispute, whether the apartment was handed over renovated or unrenovated.

Renovation Quality and Do-It-Yourself Work

Owners and landlords can save significantly on renovations by doing the work themselves. Painting walls, laying laminate flooring, or hanging wallpaper are tasks that handy DIYers can perform on their own. However, doing the work yourself is time-consuming and requires a certain level of care-sloppy renovation work can lower the property’s value rather than increase it. When preparing a property for sale or re-rental, it is better to hire a professional contractor if there are visible flaws (uneven paint, poorly laid floorboards).

For tax purposes, landlords can only claim contractor invoices showing VAT as business expenses-work done by the owner is not tax-deductible. Owner-occupiers can claim 20% of the labor costs (not material costs) from contractor invoices as a tax deduction under Section 35a of the Income Tax Act (EStG), up to a maximum of 1,200 euros per year.

Practical Tip for Nuremberg and Franconia

Anyone looking to sell or re-rent an apartment or house in the Nuremberg metropolitan area can often achieve a significant increase in value with targeted renovations at a manageable cost. We recommend painting at least the walls and ceilings in light, neutral tones and replacing worn flooring before selling. Renovating the bathroom is particularly effective: new silicone caulking, a fresh coat of paint, and modern fixtures can significantly improve the overall impression without altering the building’s structure.

In Nuremberg’s older neighborhoods such as Gostenhof, Johannis, or the Südstadt, renovated apartments with visible original details-such as stucco ceilings, paneled doors, or hardwood floors-are particularly effective at increasing value. We recommend preserving and highlighting such historical elements during renovation rather than covering them up. Based on our experience, the cost of a sales-boosting renovation for an 80-square-meter apartment in the region ranges between 4,000 and 12,000 euros, while the achievable increase in value can be many times that amount. Contact us; we’d be happy to provide an assessment of which measures will yield the best return for your property.

Frequently Asked Questions

What does renovation entail?

Renovation includes only measures that improve the appearance of a property without altering its structural integrity. This includes painting and wallpapering walls and ceilings, installing flooring such as laminate, hardwood, or tile, replacing light switches and outlet covers, updating door handles and fixtures, and repairing minor plaster damage. As soon as load-bearing walls, wiring, or building systems are involved, it is considered a renovation.

Can I claim the costs of a renovation as a tax deduction?

For landlords, renovation costs are immediately deductible as business expenses against income from renting and leasing. Owner-occupiers can claim tradespeople’s services under Section 35a of the German Income Tax Act (EStG)-20 percent of labor costs, up to a maximum of 1,200 euros per year. The prerequisite is that the invoice is paid by bank transfer. Material costs are not deductible for owner-occupiers. We recommend carefully keeping all invoices and bank transfer receipts.

How often should a rental apartment be renovated?

There are no legally prescribed renovation intervals. The schedules of deadlines that used to be common in lease agreements-such as the kitchen and bathroom every three years, living areas every five years-are invalid as rigid requirements according to Federal Court of Justice (BGH) case law. The actual degree of wear and tear is the determining factor. In practice, we recommend that landlords inspect the condition of the apartment whenever there is a change of tenant and, if renovation is visibly needed, carry out the work before re-renting in order to achieve a market-rate rent.

Which renovation measures increase the selling price the most?

Experience shows that the most effective measures before a sale are: A fresh coat of paint in light, neutral tones (ROI up to 5x with cost-effective implementation), installing new flooring (especially if the carpet is worn), visually upgrading the bathroom (new fixtures, fresh silicone caulking, cleaning tiles), removing personal items and decluttering, as well as professional cleaning. Less effective are measures that buyers do not perceive as adding value-such as replacing electrical systems that are still functional or making changes to the floor plan.

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