Renovation loan for a listed building: Your path to financing
1 Jun 2025
8
Minutes
Katrin Straub
CEO at nextsure
A listed building has a unique charm, but renovation poses financial challenges. The costs can be up to 25 percent higher than for a normal building. Learn how to find a suitable renovation loan for a listed building online with the right strategy and make the most of government assistance.
The topic in brief and concise terms
The renovation costs for a listed building are often up to 25 percent higher than for a regular building, which requires careful financial planning.
State KfW loans (up to 150,000 euros) and repayment grants (up to 15,000 euros) are the most important pillar of financing.
Through the monument depreciation (Denkmal-AfA), owner-occupiers can deduct 90 percent and investors can deduct 100 percent of the renovation costs from their taxes over several years.
Realistically assess costs and requirements in monument renovation
The restoration of a listed building often costs 20 to 25 percent more than for a non-protected property. These additional costs arise from the use of special, historically accurate materials and skilled craftsmen. Any structural alteration also requires approval from the relevant monument protection authority. Without this approval, you risk fines and, in the worst case, a retrofitting obligation with significant additional costs. Therefore, initiating contact with the authority at an early stage is the first and most crucial step in any renovation project. The good news is that the government supports these efforts with extensive grants and tax advantages. These aids are essential to reduce the financial burden and pave the way for the future.
Using state subsidies as a financial foundation
The Kreditanstalt für Wiederaufbau (KfW) is the central contact point for the promotion of historic buildings. The programme “Residential Buildings – Credit 261” offers loans of up to €150,000 per residential unit for the renovation to an Efficiency House Monument. Additionally, you benefit from a repayment subsidy, which can reduce the repayable loan amount by up to €15,000. For individual measures like replacing heating systems or windows, there are also attractive grants from the Federal Office for Economic Affairs and Export Control (BAFA). These grants usually need to be applied for before the start of the measures. It is often possible to combine different funding sources, which can significantly ease financing, such as in the case of financing for roof renovation. The involvement of a certified energy efficiency expert is required for applying for most KfW funds. This expert ensures that the planned measures comply with the funding guidelines and the requirements of monument protection.
Utilise tax advantages through the monument depreciation to reduce costs
A significant financial advantage is the monument depreciation (AfA) according to the Income Tax Act. It allows you to claim a large portion of the renovation costs for tax purposes. The amount of depreciation depends on how you use the property. Owner-occupiers can offset nine percent of the renovation costs each year over ten years, a total of 90 percent. Investors who rent out the property can even write off 100 percent of the costs over a period of twelve years. In the first eight years, it is nine percent each year, and in the following four years, it is seven percent each year. It is important that only measures that serve to preserve the listed building and have been approved by the authorities are deductible. These typically include:
The renovation of the façade or the roof
The renewal of historical windows and doors
The installation of a modern heating system
The repair of the roof truss or the timber framework
General modernisations in the interior, such as bathrooms
The monument AfA is a powerful tool to reduce financial burdens and can be combined with a savings contract for renovations. This way, you create a solid foundation for the long-term preservation of your property's value.
Find the right renovation loan for your listed building online
Once you have the funding commitments and the monument protection approval in the bag, you can apply for the actual renovation loan from a bank. A well-prepared application increases your chances of success many times over. For historical buildings, banks assess not only your creditworthiness but also the plausibility and economic viability of the entire project. Therefore, always provide a detailed cost breakdown, the architect's plans, and the approval from the monument protection authority. Compare the terms from at least three different financial institutions to find the best offer. Some banks have specialised departments for construction financing that have experience with heritage properties. A favourable construction loan with current interest rates is often the key to success. Combining a KfW loan with a bank loan is a common and very effective way to finance your project.
Expert tips for seamless financing and renovation
The renovation of a historical building is a complex project with many pitfalls. However, with the right preparation, many problems can be avoided. Our expert tip: Bring all stakeholders – the architect, energy consultant, craftsmen, and the monument protection authority – to the table as early as possible. A joint on-site inspection can minimize misunderstandings and produce pragmatic solutions. Please note that monument protection laws are a matter of federal states and the requirements can vary depending on the state. Moreover, a once granted permit is often only valid for a limited period, usually for four years. To keep track, you should note the following points:
Obtain written permission from the monument protection authority before concluding contracts with craftsmen.
Always apply for public funding before the start of construction work.
Be accompanied by an architect or energy consultant specialized in historical monuments.
Thoroughly document all work and costs for future tax deductions.
Plan a financial buffer of at least 15 percent for unforeseen expenses.
This careful planning helps not only with financing but also with the long-term preservation of historical value, similar to a conversion for barrier-free living. This ensures that your project stands on a solid foundation.
Request a personalised risk analysis now
Renovating a listed building is a rewarding, yet challenging task. A solid financial foundation is key to success. Have your insurance situation evaluated for free and receive specific suggestions for optimisation to ensure your valuable property is well protected from the start.
More useful links
Federal Ministry of Finance provides detailed information on tax incentives for monument protection measures that are relevant for owners of listed properties.
FAQ
What is the first step if I want to renovate a listed building?
The first and most important step is to contact the relevant heritage protection authority. Find out which measures require approval and what conditions exist before you start further planning or financing requests.
How do I find the right renovation loan for a listed building?
To find the right renovation loan, you should first apply for all possible government subsidies (KfW, BAFA). With these approvals and a detailed cost breakdown, you can then obtain and compare offers from multiple banks.
Which costs are deductible with listed building depreciation?
All costs necessary for the preservation and sensible use of the listed building, which have been approved by the authorities, are deductible. These typically include works on the facade, roof, windows, heating, and general modernisation.
Do I need to hire an expert for the KfW funding?
Yes, for most KfW programmes for energy-efficient refurbishment, the involvement of a certified energy efficiency expert, listed in the federal expert directory by dena, is a mandatory requirement.
Is it financially worthwhile to purchase a listed building?
Despite high renovation costs, purchasing can be financially worthwhile due to the combination of KfW funding, significant tax deductions (monument AfA), and potentially high resale value. However, careful calculation is essential.
