BERLIN (dpa-AFX) - Construction Minister Klara Geywitz (SPD) is proposing tax incentives to boost struggling residential construction. "In view of the dramatic slump in building permits and the associated decline in construction investment this year, the construction and real estate industries urgently need new investment incentives," Geywitz said Wednesday. She wants tax depreciation options for new buildings to be significantly expanded. First the news portal "The Pioneer" had reported on it.

Geywitz sees this as part of the Growth Opportunities Act planned by German Finance Minister Christian Lindner (FDP): "I expressly support the proposal of the German Finance Minister to launch a Growth Opportunities Act for Germany. However, there is a loophole."

Lindner wants to relieve the burden on the economy by around 6.5 billion euros a year with a tax package. The core element is a premium for investments in climate protection announced in the coalition agreement. The draft has not yet been agreed within the government. If Geywitz's proposal were implemented, it would initially mean tax revenue shortfalls probably in the billions.

Housing construction, which has been booming for years, has come to a standstill due to the sharp rise in interest rates on loans and increases in construction costs - this is putting a strain on the construction industry as a whole. The German government's target of 400,000 new homes per year was missed by a wide margin last year.

In concrete terms, the Minister is proposing the introduction of a time-limited, so-called declining balance depreciation for newly constructed residential buildings from January 2024. This is to apply until the end of 2030 and is intended to create an incentive to implement construction projects quickly. In the year of completion and in the following three years, seven percent of the construction costs are to be depreciated, and five percent in the following four years.

"The temporary declining balance depreciation would be an important contribution to stabilizing the construction industry and thus creating more affordable housing in Germany," she said. "If the German economy wants to get back on track for growth, it can only do so with a strong construction industry."

Previous benefits such as the increase in so-called linear depreciation and the reintroduction of special depreciation were not enough to create enough investment for urgently needed new housing, according to a paper from the ministry./hoe/DP/mis