(a) Investment Property: Buildings held for rental income or value appreciation (not land).

(b) Optional Depreciation: Businesses using accrual accounting can elect a 4% annual depreciation deduction on the property’s original cost or tax written-down value (whichever is lower). This is irrevocable and applies to all investment properties.

(c) Tax Impact: Reduces taxable income each year but has to be added back when disposing or selling the property (except if transferred in a tax group or under certain tax-neutral provisions).

(d) Rules for Transfers: In the event of an intercompany transfer within a tax group or under tax-neutral provisions defined under Articles 26 or 27 of the Corporate Tax Law, the receiving company (transferee) cannot claim depreciation on amounts already written off by the seller (transferor) to prevent double-dipping on tax benefits. In the future, if the transferee sells the asset, the taxable income of the transferee should be adjusted for any depreciation previously being excluded.

(e) Deadlines: Elect in the tax return for:

1. First tax period starting on/after January 1, 2025, if you hold investment properties.

 2. The period you acquire your first investment property.

 3. The first period after an Article 21 exemption ends.

(f) Anti-Abuse Rule: Tax authorities can disallow deductions for related party transfers with no valid business purposes.

(g) Action Steps:

1. Review your investment properties.

 2. Consult with professional to decide on the election.

 3, Make the election in the appropriate tax return.