Old real estate: apartment & house from older decades

Over 2,650,000 properties in Germany were built before the year 1919. And some time later in the middle of the century, there were even almost 7,500,000 houses! Of course, construction technology was different back then. But as the decades passed, the building industry rapidly learned and not only resorted to more efficient building materials, but also focused on the topics of sound and heat insulation, as well as fire protection.

Here is a brief overview:

• Built before 1919: 2,655,042
• 1919 – 1949 Built: 2,374,762
• 1950 – 1979 Built: 7,357,255
• 1980 – 1989 Built: 2,090,142
• 1990 – 1999 built: 2.490.829
• 2000 – 2011 built: 1.954.588

Each decade brought different advantages and disadvantages. Do you want to invest in a condominium built in 1940? Or buy an apartment building built in 1967 as an investment? Before we go into the different defects, here in advance the advantages and disadvantages of such an older existing property:

Existing property: advantages and disadvantages summarized

If you want to invest in an income property, then an existing property from older decades has very clear advantages: The purchase price is low and the rental yield is high. The ancillary purchase costs and the equity capital to be invested are also kept within reasonable limits. At the same time, maintenance costs are comparatively high.

Older existing properties in B and C locations make excellent yield properties!

Here again summarized, the advantages and disadvantages.

Advantage of buying an old property:

• Mostly more favorable purchase price
• Costs are calculable if you are aware of the defects
• Lower purchase price often ensures better return on investment
• Location in grown infrastructure

Disadvantage of buying an old property:

• High costs for maintenance and repairs
• Possible hidden defects

So what distinguishes the properties of different construction years from each other? And what are the respective defects you should expect? So let’s start chronologically – with properties older than 120 years.

Real estate with year of construction 1900

Cracks in the masonry are typical for older properties built before 1900. Due to the outdated construction technology of that time, thermal insulation is either non-existent or inadequate. The windows are usually single-glazed, letting the cold into the house in winter, while moisture accumulates in the attic and basement rooms. And some deficiencies can be found in the bathrooms as well: Lead pipes, which have not been permitted since 1971, can often be found here and usually need to be urgently replaced after purchase.

Typical for 120+ year old properties: energy sufficiency was not an issue back then!

Defects of real estate before 1900

Here is a brief overview:

• Cracks in plaster and masonry
• Lack of thermal insulation on the facade, roof and windows
• Damp basement
• Outdated technology and electronics
• Outdated clay and lead pipes in the bathroom

Real estate with year of construction 1900 – 1939

Similar defects can also be found in properties built between 1900 and 1939. A lack of underlayment lets cold and damp into the house, wooden beam ceilings are plagued by sponge infestation and the walls, which are often constructed far too thinly, are prone to mold. Not only the ceiling is made of wood, but also the stairs – an enormous fire risk!

Characteristic: In the past, no attention was paid to fire protection during construction!

Checklist: Defects of real estate around 1900 – 1939

All shortcomings briefly summarized at a glance:

• Missing underlays
• Condensation problems
• Sponge and mold infestation
• Hardly any fire protection available
• Obsolete clay and lead pipes
• Cracks in the masonry

Real estate with year of construction 1939 – 1945

Typical for real estate built between the years 1939 and 1945 is the poor building fabric. During the war, raw materials, time and energy were put into the war. Building was therefore fast and cost-saving, which is why both building fabric and the statics of some properties suffered. Unsuitable building materials were also used, such as building rubble and summer wood.

Checklist: Defects of real estate around 1939 – 1945

Typical deficiencies include:

• Poor building fabric
• Pest infestation due to wrong building material
• Static problems
• Cracks in the masonry
• Obsolete gas pipes
• Hardly any fire protection

Real estate with year of construction 1945 – 1959

Above all, poor or missing thermal insulation is often found in properties built between 1945 and 1959. Building materials that are now considered questionable were also often used. These include asbestos, tar, formaldehyde paint and lead paint. Still an issue: the lack of fire protection. After the war, houses had to be built quickly and efficiently. As a result, there is usually a lack of access for the fire department, and fire doors are also almost non-existent. Soundproofing was also not considered at the time, which is why old apartments from this period are often very bright.

Checklist: Defects of real estate around 1945 – 1959

Characteristic of real estate from the period are:

• Use of questionable building materials
• Lack of fire protection
• Lack of soundproofing
• Lack of thermal insulation
• Leaking gas pipes
• Cracks in the masonry

Real estate with year of construction 1960 – 1969

In the second half of the 20th century, the construction method improved. Wood was no longer used for stairs and ceiling. Instead, stone and concrete were now used and the windows were insulated with aluminum. Drains prevented moisture from causing mold in the basement and attic, and underlayment was installed. From now on, emphasis was placed on thermal insulation, but harmful substances continued to be used for this purpose.

Checklist: Defects of real estate around 1960 – 1969

Here is a brief overview:

• Building materials of concern
• Insulation harmful to health
• Concrete damage
• Uninsulated roof trusses

Real estate with year of construction 1970 – 1979

In the 1970s, building technology once again improves immensely. The newly adopted requirements for sound insulation lead to more efficient construction. Lead pipes are no longer laid, but copper water pipes, and construction is mainly done with concrete. Despite improved building materials, cold penetrates the living spaces in winter and leads to mold.

Checklist: Defects of real estate around 1970 – 1979

Typical deficiencies include:

• Parquet adhesive containing tar
• In need of renovation
• Concrete as a building material

Real estate with year of construction 1980 – 1999

Properties built in the last 30 to 40 years are usually characterized by their modern construction technology. Nevertheless, some deficiencies can be found here as well. The costs for maintenance are high, the roof connections are broken and the central heating before 1985 often leads to problems.

Checklist: Defects of real estate around 1980 – 1999

Here again the typical defects from 1980 – 1999:

• Connections and terminations for flat roof
• Central heating
• Expensive maintenance

Conclusion: Should you invest in old real estate?

Admittedly: Compared to new buildings of the modern age, properties from older construction years have their very own charm. And depending on the year of construction, they bring their own advantages and disadvantages, and with a little capital, even building services, roof and masonry can be renewed.

You can now find even more about the respective defects by year of construction on my new project for real estate buyers (Immobilien-Erfahrung.de):

• Year of construction property: defects and condition (external)

Der Beitrag Real estate defects by year of construction: building fabric, masonry, insulation & Co. – Valuation erschien zuerst auf ℄ Real Estates.

Corporate income tax (KSt) – tax for legal entities

Corporate income tax – KSt for short – is usually levied on the income or profit of legal entities domiciled in Germany and is thus complementary to income tax (ESt), which is usually levied on individuals. Taxable persons typically include corporations, associations, cooperatives and foundations. A limitation of corporate income tax comes into play, for example, if the management and headquarters of the legal entity are located abroad. Political entities, federal companies, state banks and social security funds, professional associations and some others are fully exempt from the obligation to pay corporate income tax.

Other taxes for businesses:

• Income tax (ESt)
• Capital gains tax (KapESt)
• Value added tax (VAT)
• Trade tax (GewSt)

If you want to learn more specifically about taxes for real estate companies, you can learn more here:

• Save taxes on real estate

Corporate income tax in detail: collection, levy & allowances

As a corporate tax, corporate income tax counts as a community tax and is levied by both the federal government and the states. The amount of the levy is calculated on the basis of the taxable income, which is the result of the profit less special expenses and extraordinary burdens, and is currently 15 percent plus the solidarity surcharge (SolZ), resulting in an overall tax rate of 15.825 percent. Corporate income tax is payable quarterly on March 10, June 10, September 10 and December 10 in equal instalments as an advance payment and is offset against the actual tax liability at the end of each fiscal year.

Dates for advance payment of corporate income tax:

• March 10
• June 10
• September 10
• December 10

As a rule, the corporate income tax return must be filed by 30 April of the following year at the latest for the preceding tax period. Extensions are possible under certain circumstances. Members of the tax advisory professions are generally subject to different deadlines for filing the corporate income tax return.

Allowances for companies without profit distribution

Companies that do not distribute profits – for example non-profit associations – can benefit from a tax-free allowance of currently 5,000 euros, whereas agricultural and forestry cooperatives and associations may be entitled to a tax-free allowance of 15,000 euros. For companies that record losses within the valid tax period, taxation does not apply at all.

Which companies are subject to corporation tax?

Most legal entities are subject to corporate income tax. All corporations – limited liability companies (GmbH), stock corporations (AG), partnerships limited by shares (KGaA), etc. – as well as cooperatives and business cooperatives are usually affected. In addition, mutual insurance companies and mutual pension fund associations have to meet their corporate income tax obligation, as do institutions, foundations, associations, etc. Commercially active public corporations – for example, transport companies or public utilities – are also affected by corporate income tax.

• Associations
• Institutions
• Foundations
• Corporations
• Acquisition cooperatives
• Business cooperatives
• Mutual insurance companies
• Mutual pension funds
• Commercially active public bodies

Partnerships such as the general partnership (OHG) or the limited partnership (KG) are generally not subject to corporation tax or income tax, but the natural persons and legal entities with partner status belonging to them are. The profit generated by the partnership is subject to uniform and separate determination and is allocated directly to the individual partners in accordance with their legal form: Legal entities must charge their profit shares to corporation tax, natural persons to income tax.

• Partnerships: Legal entities with profit shares

Political parties, professional associations, charitable corporations and federal corporations are generally exempt from corporate income tax.

Overview of company law forms

You can find more information about the different legal forms under the following links. Starting with the sole proprietorship and the registered traders… to the various partnerships and corporations… to other companies such as the family foundation – all the essential aspects of formation, liability, tax burden and more explained simply and understandably! First of all, an overview of the individual legal forms of companies:

• Sole proprietorship (EU)
  • Freelancer
  • Small business
  • Registered traders (e. K.)
• Silent partnerships
• BGB companies / civil law partnership (GbR)
• Partnerships
  • Limited partnership (KG)
  • General partnership (OHG)
  • Limited Liability Company and Company Limited Partnership(GmbH & Co KG)
  • Limited Liability Company and Compagnie General Partnership(GmbH & Co OHG)
• Corporations
  • Stock corporation (AG)
    • AG & Co KGaA
  • Partnership limited by shares (KGaA)
  • Limited liability company (GmbH)
    • GmbH & Co KGaA
  • Entrepreneurial company / UG (limited liability)
  • European Company / Societas Europaea (SE)
    • SE & Co KGaA
• Other companies
  • Foundations / Family Foundations
  • Insurances
  • Partnerships
  • Registered associations (e. V.)
  • Registered cooperatives (e. G.)

Taxes in Germany: List

Corporation tax (KSt), income tax (ESt), capital gains tax (KapESt), turnover tax (USt), trade tax (GewSt) – who pays what? In this overview of the different types of taxes / tax forms in Germany, you will find relevant taxes for you as an individual and for your business, depending on which legal form you have chosen. Also, after the tax list: How does the tax cycle work around month-end closing, year-end closing and balance sheet? A little insight for those starting their first company. What taxes are there? Simple explanations, definitions, tax optimization, an insight into taxes.

• Taxes: List

Der Beitrag Corporate income tax (KSt) simply explained: UG, GmbH & other legal forms erschien zuerst auf ℄ Real Estates.

Annual General Meeting – The decision-making body

The Annual General Meeting acts as the decision-making body of a stock corporation. It represents the legislative body of the company and is intended to relieve the members of the supervisory board and the management board of their duties. The general meeting consists of the shareholders of an AG and is usually convened once a year.

More on the other bodies of a public limited company:

• Board of directors
• Board of directors

Duties of the Annual General Meeting – Auditor, appropriation of profits & Co.

It decides which shareholders are appointed to the supervisory board and also elects the auditor(s) for the annual financial statements. The general meeting is the only body of an AG that may decide on the appropriation of the balance sheet profit and can be influenced by proposals from the members of the management board and the supervisory board. Another important task of the general meeting: It passes resolutions on essential issues – for example, with regard to capital increases or reductions, possible mergers or dissolutions, sales, takeovers or acquisitions…. insofar as these result in an amendment to the Articles of Association.

Overview of the tasks of the Annual General Meeting:

• Discharge of the Management Board & the Supervisory Board
• Election of the Supervisory Board members representing the shareholders
• Election of the auditor
• Decision on the appropriation of profits
• Decisions on matters concerning amendments to the Articles of Association

The members of the general meeting are automatically provided with participation in the formation process of the stock corporation. In contrast to the management board and supervisory board, they are not bound to fixed terms of office, but are allowed to hold office until they leave the company. Each shareholder receives votes in proportion to his profit shares. The shareholder is granted one vote per share.

AG: foundation, legal form, special case real estate

1. Stock corporation (AG)
2. Real estate stock corporation (REIT-AG)
3. Real estate company

Stock corporation (AG): Formation, liability, legal form & Co.

Aktiengesellschaft (AG) – The stock corporation is a German legal form founded by at least one person and organized by different bodies. Instead of a managing director, the company is managed by a board of directors consisting of at least one person. As the name already indicates, this legal form of a company primarily stands for stock trading. You would like to start a company alone or together with other people and learn more about company law forms in advance? Then you’ve come to the right place!

• Stock corporation (AG)

Real estate stock corporation (REIT-AG)

Real estate stock corporation / REIT-AG – You don’t find the idea of a stock corporation bad at all and are now wondering how you can combine your capital company with the real estate industry? A real estate company is a company that serves the financing, development, realization, leasing, or marketing of real estate – starting with a single property up to a real estate portfolio in the three or multi-digit range. The management of real estate property or third-party real estate on behalf of third parties can also be handled by a real estate company.

• Real estate stock corporation (REIT-AG)

Real Estate GmbH & Asset Management GmbH

Alternative – In this article you will learn the basics about real estate companies. Briefly explained, a real estate company is a company that has the purpose of leasing, developing, financing, realizing and/or marketing. It doesn’t matter if it is one or more properties. The management of residential and commercial real estate – in its own interest or as a service offered to third parties – is also a popular focus for real estate companies and asset management GmbHs. Find out more about the main advantages and disadvantages of buying real estate and the expected costs.

• Real estate company

Der Beitrag Annual General Meeting – decision-making body of a stock corporation (AG) erschien zuerst auf ℄ Real Estates.

Structural alterations (WEG) at a glance: Permanent transformation of the common property

• Construction measures for condominium owners’ associations
• Is permanent
• Will be carried out subsequently
• Leads to the transformation of the common property
• Goes beyond proper maintenance or modernising repairs
• Requires formal resolution in the owners’ meeting

Back to the wiki: Real Estate

Der Beitrag Structural changes (WEG) must be formally resolved erschien zuerst auf ℄ Real Estates.

Age depreciation at a glance: Impairment due to useful life

• Impairment of a property due to total useful life
• Is related to the market value of a property
• Reduced value due to shortened remaining useful life
• Reduction due to wear and tear, construction defects, wear and tear and obsolescence

Back to the wiki: Real Estate

Der Beitrag Depreciation of property erschien zuerst auf ℄ Real Estates.