Dhe clock is ticking for the new property tax. From July 1st, owners must provide the required data. In many cases, the tax authorities point out that they have until the end of October to do this. For example, the Nürtingen tax office reminded of this obligation in a letter at the beginning of June, naming the parcels, the file number and asking that the declaration be submitted electronically. Such a personal approach does not have to exist.
At the end of March, the federal government publicly announced that this obligation exists in eleven federal states. Not all of them are because Baden-Württemberg, Bavaria, Hamburg, Hesse and Lower Saxony have used the new opportunity to pass their own property tax laws. In Saarland and Saxony, only a slight modification of the federal model was decided upon. It’s the same everywhere: The basis is the ownership structure as of January 1, 2022. And off we go with the new taxation in 2025.
In April 2018, the Federal Constitutional Court rejected the old property tax and instructed the legislature to quickly replace the unit values of 1964 in the West and 1935 in the East with something new. In November 2019, the Federal Council approved the reform – just before the deadline set by the judges in the red robes. After another two and a half years, the real estate owners are now coming into play. They get just four months with their tax advisors to submit the declaration. Tax offices and municipalities then have a good two years to make concrete demands from abstract information.
Municipalities decide on the final load
There is no general answer to the crucial question “Who will have to pay how much in the future?” – and certainly not today. This is due to the different models and the tiered process. You still need three things in the federal model: property tax value, tax index and assessment rate. First, the tax offices calculate the first value using the electronically submitted data. This is then multiplied by the tax figures.
In the end, the municipalities decide on the final burden with the assessment rate, which is a kind of tax rate. You are entitled to the revenue from the property tax, which is currently almost 15 billion euros. The cities have promised not to use the new regulation to enrich themselves. But will every municipal council stick to it when determining the new tax rate? Even if the total volume stays the same, that doesn’t mean that nothing changes. Anyone who has benefited from the unrealistic standard values will probably have to pay more from 2025 onwards – and vice versa.
In the federal model, five pieces of information are needed for residential properties: property area, standard land value, property type, age of the building, living/usable area. As an example, the Ministry of Finance calculates a house from 1960 with 120 square meters of living space and 1,000 square meters of land: With a standard land value of 400 euros, there is a tax of 404.71 euros per year, with a standard land value of 200 euros to 283, 47 euros. It is assumed that the municipality adjusts its assessment rate in such a way that its property tax revenue does not change in the course of the reform.
In Hesse, the financial administration needs living space, floor space, type of use and general information about the property such as address, district, corridor, parcel, land register page number. The tax office automatically contributes land values and the reduced tax index for housing. In Baden-Württemberg, the main focus is on the land value. There is a discount for residential use, otherwise the building is irrelevant.
“Anyone who has built upwards will probably find it cheaper,” explained the still chairman of the German tax union, Thomas Eigenthaler (his successor will be elected this Wednesday). If you live in a single-family house with a larger garden, you have to expect to pay more. The former head of a tax office in Stuttgart assumes that things will not always go smoothly. In any case, everyone is required to check the decision of the tax office.
