Annual Tax Act 2026 Codifies Purchase Price Allocation in New Section 6f EStG

The German Federal Ministry of Finance published the draft Annual Tax Act 2026 on 19 May 2026. The central provision for real estate owners is the new section 6f of the German Income Tax Act (EStG). For the first time, the allocation of the total purchase price for developed plots between land on one hand and the building on the other is regulated by statute. Cabinet consideration is scheduled for 1 July 2026, with the legislative procedure expected to conclude in the fourth quarter of 2026.

Three Tiers of the New Rule

Paragraph 1 adopts the standard developed by the Federal Fiscal Court (BFH) verbatim. A purchase price allocation agreed in the contract shall form the basis of taxation, provided it does not fundamentally miss the actual value relations and appears economically tenable. This wording corresponds to the established case law of the BFH, in particular the judgment of 21 July 2020, file reference IX R 26/19.

Paragraph 2 defines the procedure where no viable contractual allocation exists. Land and building values are to be determined separately under the Real Estate Valuation Ordinance 2021 (ImmoWertV 2021). The purchase price is then allocated in proportion to the two value components. The comparative value, income value and asset value methods stand on equal footing. The residual value method, previously widespread, is expressly excluded.

Paragraph 3 anchors the BMF working tool in statute for the first time as a qualified estimate. Anyone seeking to deviate from its result requires an appraisal by a publicly appointed and sworn expert or by an expert certified to DIN EN ISO/IEC 17024. The appraisal must be based on a personal site inspection.

The new rule shall apply for the first time to developed plots acquired under a notarial purchase contract concluded with legal effect after the day of promulgation of the Act. The relevant point in time is the notarial purchase contract, not the transfer of benefits and burdens.

Practical Significance for TWGA Clients

Tax Advisors

Section 6f EStG entails a twofold tightening of the counter-evidence requirement. Anyone deviating from the BMF working tool will not only need a qualified appraisal, but the appraisal must be based on a personal site inspection. A pure desktop appraisal without inspection no longer suffices under the draft. The tightening of the remaining useful life rules, halted in 2025, returns by way of statute for purchase price allocation.

Banks

In the lending environment, the role of purchase price allocation shifts. A clean contractual allocation in the notarial deed becomes the most important lever, because under paragraph 1 it generally forms the basis of taxation. A subsequent correction by the tax authority requires that the allocation is economically not tenable.

Solicitors

In tax and real estate law, a statutory definition emerges for the first time. The previous case law of the BFH is codified, while the bar for counter-evidence is raised. Clients with ongoing acquisition projects should now document purchase price allocations contractually with care and back them with an open market value appraisal.

Family Offices

For portfolio build-up, strategy changes. Future acquisitions following promulgation require a clearly substantiated building value share, which directly affects the depreciation basis and thus the yield. An unfavourable allocation reduces depreciation permanently.

Recommendation for Ongoing Acquisition Projects

For clients with current acquisition plans, we recommend formulating the purchase price allocation in the notarial deed precisely now and commissioning an open market value appraisal in parallel before section 6f EStG enters into force. For acquisitions already concluded, the transitional rule in section 52 paragraph 14b EStG-E applies. The relevant date is the notarial purchase contract, not the transfer of benefits and burdens.

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