Maintenance Reserve: Amount, Tax Treatment & Use Explained Clearly

What belongs in the maintenance reserve – and what does not?

In everyday usage, you will also encounter the term reserve for preservation – the term is particularly common in the context of condominium law.

Typical purposes (examples)

• Roof renovation, façade work, balcony/concrete repairs
• Replacement of the heating system or central piping
• Modernization/renewal of elevators, intercom systems or electrical installations
• Major outdoor works (e.g. courtyard, drainage)

What usually does not belong in it?

Ongoing costs (e.g. caretaker services, stairwell cleaning, insurance) are typically settled via the service charge or ongoing operating costs and are not paid from the reserve.

If you would like to explore the legal classification in more depth, you can find the official statutory texts (e.g. the Condominium Act) on the website Gesetze im Internet.

Law & obligation to build a maintenance reserve

In condominium ownership (WEG), building up reserves is a key issue because it ensures the community’s ability to act. Whether and how much is set aside is, in practice, determined by resolutions, the economic plan and long-term maintenance planning.

Resolution & majority

Common practice is that the community resolves, as part of the economic plan, the contribution to the reserve. Depending on the issue, simple or qualified majorities may be required (e.g. for major measures).

Typical regulatory instruments in everyday practice

• Economic plan: Specifies, among other things, the monthly contribution.
• Annual statement: Shows planned/actual figures and the reserve balance.
• Declaration of division/community rules: May contain details on allocation and handling.

For a quick overview of condominium topics, the information pages of the Federal Ministry of Justice are often helpful (legal information, publications).

How high should the maintenance reserve be?

The question “how much reserve is appropriate?” is asked particularly often – frequently with the addition “per sqm” or “per m²”. There is no universal answer, but there are sensible reference values and an approach that works for most buildings.

Reference values per sqm / m²

As a rough guideline, many property managers and owners use amounts per m² of living space per month. Key factors are age, condition, equipment and planned measures.

Important: These are guidelines only. For specific properties, a technical assessment and multi-year planning are often more accurate than any rule of thumb.

Calculation: a pragmatic approach

1. Determine the residential/usable area (m²) and the annual target contribution.
2. Estimate the maintenance requirement (e.g. based on lists of measures, expert opinions, experience).
3. Spread the requirement over a period (e.g. 10–20 years).
4. Derive the monthly contribution per m² from this.

“Peters formula” & other models

In practice, reference is sometimes made to a “Peters” calculation – meaning model-based approaches to derive a reserve amount from construction costs, age and service lives. Such formulas can serve as a starting point, but do not replace an individual property assessment.

Tip: If elevators, underground parking or extensive building services are present, the reserve is often underestimated. Review these “cost drivers” separately.

Old building vs. new construction

• Old building: higher reserve due to piping, roof, façade, moisture, thermal insulation.
• New construction: lower need, but plan reserves for technical systems (heating, ventilation, elevator).

Tax treatment: deductibility, income-related expenses & tax return

A particularly common question is: “Is the maintenance reserve tax-deductible?” The short classification: The mere contribution to the reserve is in many constellations not immediately deductible as income-related expenses, because no actual maintenance expense has yet been incurred. It often becomes relevant only when measures are actually paid from the reserve.

Income-related expenses in case of letting

If you rent out an apartment, expenses for maintenance and certain repairs are often relevant as income-related expenses. The decisive factors are timing and the specific type of costs.

• Contribution: often no immediate tax effect.
• Use/outflow: may be relevant if the costs are attributable to maintenance.
• Distinction from acquisition costs: crucial in the case of purchase and major measures.

For general tax information and forms, the website of the Federal Ministry of Finance can serve as an entry point.

Tax return: where to enter, disclose, which line?

Many questions focus on “enter”, “disclose” and “line”. Which annex and which line applies depends on your situation (letting, owner-occupation, possible partnerships, etc.).

Practical note: Keep annual statements, individual receipts and resolutions. For tax treatment, documentation is often more important than the reserve amount itself.

Maintenance reserve when buying & selling

When buying or selling a condominium apartment, the question often arises: “Does the reserve reduce the purchase price?” or “How is it treated in the purchase agreement?” In practice, what matters is what has been contractually agreed and how the reserve balance is shown.

Purchase price: does the reserve “reduce” it?

The reserve is often informally viewed as a “credit balance”. However, in WEG constellations, the reserve generally belongs to the community, not to you personally. In the event of a change of ownership, the key question is therefore: How is the share taken into account economically?

• Sometimes a “reserve share” is informally included in price negotiations.
• Legally/accounting-wise, the presentation in documents (economic plan, annual statement) is central.
• It is important whether special assessments are foreseeable (e.g. planned renovation with insufficient reserves).

Real estate transfer tax & acquisition costs

Questions about real estate transfer tax and acquisition costs arise because buyers want to know whether reserve shares affect the assessment base or must be treated separately for tax purposes. This depends on the specific structure and the information in the purchase agreement.

For general information on real estate transfer tax, introductory texts can be found at Finanzamt.de.

Change of ownership: payout or transfer?

Many buyers and sellers want to know whether the “share” of the reserve is paid out. In many WEG cases, no payout is made to the seller; instead, the economic effect is reflected via the purchase price or the accounting position.

Tip for buyers: Ask to see the reserve balance, planned measures and recent statements. A low reserve with foreseeable renovations can lead to special assessments.

Withdrawal & use: earmarking and “improper” use

Many questions revolve around withdrawal and use and when this is considered improper. The core principle: reserves are usually earmarked. Withdrawals should be transparently resolved and documented.

When is a withdrawal common?

• To finance specific maintenance/repair measures
• To partially finance larger projects (remainder possibly via special assessment/loan)
• With a clear resolution basis and traceable cost calculation

Improper withdrawal: why problematic?

An improper withdrawal – for example to cover ongoing operating costs – can lead to conflicts because it undermines provisions for maintenance. It also makes future financing of major measures more difficult.

Apportionable / passed on to tenants?

Whether costs are apportionable or can be passed on to the tenant depends on the type of cost. Reserve contributions are typically not apportionable operating costs; rather, specific apportionable items are relevant, provided they legally qualify as operating costs.

A clear overview of operating costs can often be found on tenant or consumer portals, e.g. at Verbraucherzentrale.

Maintenance reserve in service charges & the annual statement

In WEG constellations, the reserve is usually funded via the service charge. In the annual statement and the economic plan, you can see the contribution and the reserve balance.

What typically appears in the documents?

• Contribution (monthly/annual): amount allocated to the reserve
• Withdrawals: payments for specific measures
• Balance: reserve amount at the reporting date
• Pro rata: your share based on ownership shares or allocation keys

Example: simplified presentation

Note: Make sure that the reserve actually exists as a cash balance (e.g. in a bank account) and is not merely shown arithmetically.

Posting, account & separate reserve account (SKR03 / SKR04)

How to post, which account, whether a separate account is required, and what SKR03 and SKR04 mean. This mainly concerns property managers, landlords with bookkeeping, or owners who want to track reserve movements cleanly.

Separate account: sensible?

A separate account for the reserve increases transparency and protects against mixing with operating funds. In addition, interest (if any) can be clearly allocated.

• Transparent tracking of contributions and withdrawals
• Easier reconciliation with the annual statement
• Risk reduction regarding “improper” use

SKR03 / SKR04: what does that mean?

SKR03 and SKR04 are standard charts of accounts (e.g. in the DATEV environment) that define structure and account logic for postings. Which accounts are actually used depends on whether you are mapping a management entity, an asset-managing structure or a commercial activity.

Practical tip: If you are “only” acting as a private landlord, clean document storage and a simple income–expense logic are often sufficient. For more complex structures, tax advice is worthwhile.

Balance sheet & presentation

For entities preparing balance sheets, reserves and their movements may require special presentation. This is not only about cash flow, but also about allocation and disclosure in accounting.

As background on bookkeeping, reference is often made to standard works or chamber of commerce information, e.g. from the IHK.

Differences by property type: condominium, multi-family house, single-family house

A sensible reserve strategy depends heavily on whether it concerns a condominium (WEG), a multi-family house or a single-family house.

Condominium (WEG)

• Reserve is formed and managed jointly.
• Decisions are made via resolutions (majority, economic plan).
• Documents (statements, minutes) are central for transparency.

Multi-family house (sole ownership or few owners)

• More flexible reserve design (no WEG mechanics required).
• For letting: documentation important for tax allocation.
• Maintenance planning can be very property-specific.

Single-family house / private home

In a private home, the reserve is more a matter of personal financial planning. The advantage: you decide alone on amount, withdrawal and use. The disadvantage: there is no “automatic” contribution as with service charges – you have to do it actively.

Commercial property

With commercial properties, lease agreements and apportionment rules play a greater role. In addition, technical systems (air conditioning, fire protection, elevators) can significantly affect reserve requirements and planning.

Calculators, examples & templates: how to estimate the reserve

Many people search for “calculator” or “calculate” to quickly obtain a plausibility check. Below you will find a simple calculation aid and a template that you can transfer to Excel or Google Sheets.

Mini calculator (rule of thumb)

Monthly reserve = Living space (m²) × reference value (€/m²/month)

Template: list of measures (simplified example)

For realistic planning, a list of measures with a time horizon is recommended. It does not have to be perfect – even a simple overview brings structure.

If you are looking for official information on funding programs (e.g. renovation), common entry points include the KfW or the portal Energiewechsel (depending on the project).

FAQ: frequently asked questions (amount, tax, payout, accounting)

Note: This article does not replace legal or tax advice. In complex cases (e.g. major renovations, purchase agreement design, balance sheet treatment), an individual review is advisable.