Property tax reform: What owners need to know now
Following the judgement of the Federal Constitutional Court on the unconstitutionality of the previous property tax assessment, the federal government agreed on a comprehensive reform. But what does this mean in concrete terms for owners and tenants? Here is an overview of the most important changes.
Why was the property tax reform necessary?
Until now, the calculation of property tax was based on obsolete values, which have not been adjusted in some regions for decades. The Federal Constitutional Court declared this practice unconstitutional. The reform should now lead to fairer taxation and ensure that:
- Real estate in better locations are taxed at a higher rate than cheaper properties in poorer locations.
- The calculation bases will become more modern and transparent.
How is the new property tax calculated?
From January 2025, the following factors will be included in the calculation:
- Plot area and Standard land value
- Property type and Building age
- The so-called Rent level, which takes into account the regional rent level
One aim of the reform is to tax more expensive properties more heavily, while less expensive housing is taxed less. However, the exact amount of property tax still depends on the Rates of assessment of the municipalities from. Regional differences may remain here.
Exception: The Bavarian „single-area model“
Bavaria relies on its own regulation, which is Opening clause becomes possible. In the „single area model“, the tax is only calculated based on the size and use of the land and building area. The land value and possible rental income play no role here.
This model is considered less bureaucratic, However, it is criticised because it could favour large properties in expensive locations. Experts assume that other federal states could follow this example.
New property tax C: the fight against land speculation
In order to tax undeveloped or unused properties more heavily, municipalities can use the so-called „Property tax C“ raise. The aim is to, Land speculation and to promote the development of open spaces.
What does the reform mean for owners?
The new property tax calculation comes into effect from January 2025 in force. The federal government promises that owners and tenants will not be burdened more overall. However, there is no guarantee of this, as the final amount of property tax depends on the assessment rates of the municipalities. According to experts, additional costs of around 50 Euro per year are created.
Conclusion: inform and act early
It is important for property owners to keep an eye on developments regarding property tax reform. If you know the value of your property, you can optimally prepare for possible changes.
✉️ Have your property valued!
Would you like to know how much your property is worth? Contact us now - we will value your property free of charge and without obligation.
Robert Schüßler
Property valuer (EIA and IHK)
Legal notice: This article does not constitute tax or legal advice in individual cases. Please consult a lawyer and/or tax advisor to clarify the facts of your specific individual case.
Photo: © fbhk/Depositphotos.com
