Principles of the choice of method: The method must be selected according to the type of property being valued, taking into account existing practices in normal business transactions and other circumstances of the individual case, in particular the available data. The choice must be justified. Application and principles In the general income approach according to Section 28 of the ImmoWertV, the preliminary income value is determined by calculating the sum of 1. the capitalized annual net income share of the buildings as of the valuation date, which was determined after deducting the land value interest amount (preliminary income value of the buildings) and 2. the land value. The income value is determined based on customary market returns. If the income ratios are foreseeably subject to significant changes or deviate significantly from the customary market returns, the income value can also be determined based on periodically varying income. Value-influencing characteristics: In this valuation method, the introduced influencing factors primarily affect the value formation and the value differences. These include, in particular, a property interest rate adjusted to the market and property-specific requirements, the level of sustainably achievable rents, management costs, the remaining useful life, and also specific condition characteristics. Capitalization of income: The property interest rate is the interest rate used to discount future income from a property to its current value. It indicates the return an investor could achieve with a comparable, risk-free investment. Property interest rates are therefore capitalization interest rates used to calculate average market interest on market values. The capitalization factor is a multiplier by which the annual net income of a property is multiplied to determine the so-called building income value. For capitalization, expected future income is discounted to the reference date. A capitalization factor is used, which is composed of, among other things, the remaining useful life and the property interest rate. The principle applies: the shorter the remaining useful life, the lower the capitalization factor, and vice versa. The higher the property interest rate, the lower the capitalization factor, and vice versa. Property interest rate: (Market adjustment factor) The valuation is calculated based on a market interest rate prevailing on the valuation date.

The methods must be selected based on the nature of the property being valued, taking into account the practices prevailing in ordinary business transactions and other circumstances of the individual case, particularly the available data. The selection must be justified. Comparative Value Method – Legal Basis and Use The comparative value method is regulated in Part 3, Section 1, in Sections 24–26 of the ImmoWertV (Immobilienwertverordnung – German Real Estate Value Ordinance). In the comparative value method, the comparative value is determined from a sufficient number of comparable prices.

§ 3 Principle of determining the mortgage lending value (1) The value on which the loan is based (mortgage lending value) is the value of the property that experience has shown can probably be achieved upon sale, regardless of temporary fluctuations in value on the relevant property market, for example due to economic conditions, and excluding speculative elements, during the entire term of the loan. (2) 1 To determine the mortgage lending value, the future saleability of the property must be taken into account, taking into account the long-term, sustainable characteristics of the property, normal regional market conditions and current and potential alternative uses within the framework of a prudent valuation. 2 The determination of sustainable characteristics of the property and their influence on the valuation requires a long-term view of the market conditions. 3 The period under consideration must be specified and its appropriateness must be clearly explained.

Liquidation Value Method – Basis and Application The liquidation value method is applied to uneconomical real estate properties whose structural facilities do not match the economic potential of the property. A typical application of Section 43 of the ImmoWertV2021 is a developed property where the development and its net income are disproportionate to the value of the land. When determining the applicable land value, comparative prices for undeveloped properties or corresponding standard land values are usually used. It must be considered that properties with demolition-ready buildings are of lower value because the building structure still needs to be removed.

to prove the actual shorter useful life in accordance with Section 7 Paragraph 4 Sentence 2 of the Income Tax Act (EStG) Tax relevance (Section 7 Paragraph 4 Sentence 2 of the Income Tax Act) The legally stipulated depreciation rates for buildings of 2% and 2.5% are based on an assumed useful life of 50 or 40 years (for buildings completed before 1925). However, this assumption can be refuted. According to Section 7 Paragraph 4 Sentence 2 of the Income Tax Act (EStG), taxpayers have the option of deviating from these standardized depreciation rates and proving a shorter actual useful life. Such proof leads to higher annual depreciation and thus to tax savings. The aim of this report is to provide precisely this proof of a shorter useful life. The useful life is therefore analyzed in detail below, with particular consideration given to its tax relevance. In doing so, it is examined whether the specific circumstances of the building justify a shorter economic use and whether the legal requirements for the application of Section 7 Paragraph 4 Sentence 2 of the Income Tax Act are met.

Calculation of the financial value: If a property is not owned by the leaseholder, the land value is deducted from the value of the notional full ownership. The difference between the achievable ground rent and the appropriate ground rent, which represents a commercial advantage for the leaseholder in the event of valuation, is also offset. This difference is capitalized over the remaining term of the leasehold. No compensation is payable upon expiration of the leasehold agreement if the remaining term of the agreement exceeds the remaining useful life of the building. The amount of the ground rent stated in this calculation corresponds to the information provided by the client. These are generally not verified.

A right of occupancy is the contractual authority to occupy a property, or parts of it, without being the owner. A lifelong right of occupancy allows the use of the property until the death of the beneficiary and only expires on the day of death. The right to rent out this property or parts of it also exists. Many older people transfer their property to another relative and, in return, have the right of occupancy registered in the land register. If such a right is registered in the land register for a property, this right is expertly taken into account using the income approach.

Usufruct is a legal form whereby a person has a share in someone else's property and derives some kind of profit from it without being the owner of the item themselves. In principle, another person remains the owner of the object to which a usufruct right is granted. The owner is generally granted three basic rights to the object: 1. Right of use 2. Right to derive fruits 3. Right of disposal By transferring a usufruct right to another person, the first two rights of use and to derive fruits are transferred to that person, so that the owner only retains the basic right of disposal. The mere ownership remains unaffected by the granted usufruct right - there is no transfer of ownership. If a usufruct is registered in the land register, this personal right is valued by an expert.

My name is Christian Knigge. I am a certified expert for the market value of residential and commercial real estate, certified by IQ-ZERT (DAkkS) and certified according to DIN EN ISO/IEC 17024. This certificate entitles me to practice before all courts in Germany. I am treated equally to an expert certified by a Chamber of Commerce. I have been preparing court reports for several years. I am also authorized to provide reports submitted to tax offices. This includes reports on the low value of real estate, which can be verified with a remaining useful life report. Reports in connection with an objection to a property tax assessment or in inheritance tax matters are also prepared professionally and competently.

In the meantime, all property owners have received a NEW property tax assessment, which in most cases results in a significant increase in property tax. You can, of course, accept this assessment and the correspondingly increased property tax. Over the past weeks and months, we have reviewed many property tax assessments and prepared expert opinions on them, which were submitted to the tax authorities following an appeal. If you have any doubts about the amount of your property tax, we will review your assessment free of charge. If we determine that the amount is unjustified, we recommend that you commission an expert opinion. If you have any questions, we look forward to hearing from you.