PROPERTY TAX REFORM – IMPORTANT INFORMATION AT A GLANCE

Property tax is assessed by the tax office on the ownership of land and buildings on it and is collected once a year. In 2018, the Federal Constitutional Court declared the calculation of property tax unconstitutional, which means that a property tax reform will start this year in 2022. The new property tax will officially apply from 2025. In this article, we summarize the most important information for you.

The previous property tax calculation

How much property tax you have to pay was previously based on a multi-stage process. The basis was the assessed value determined by the tax office for the property in question. This value was multiplied by a statutory tax assessment figure and then offset against the so-called assessment rate.

Originally, the assessed values were to be determined by the tax office every six years – instead, the first and last main assessment was carried out in 1935 for East German properties and in 1964 for West German properties. Due to the different price developments, a new calculation now applies, which counteracts the current unequal treatment of comparable properties.

The new regulation

The previous procedure, which is made up of the property tax value, tax base and assessment rate, will be retained. The assessed value, on the other hand, will no longer be used as the basis for calculation. The property tax values, which will be recalculated, are made up of the following information:

• Location of the property
• plot area
• Standard land value
• Type of building
• Living space
• Year of construction of the building

As the owner, you must submit this data to your tax office in a declaration of assessment. From July 1, 2022, this can be done easily via the online tax portal ELSTER.

New property tax C for plots ready for construction

In addition to the existing property tax A for agricultural use and property tax B for building use, a third tax has been added: property tax C, which applies to land ready for building. This will encourage owners to actively build on land. At the same time, the reform will prevent property speculation.

Expert advice from Victor Investment

As a long-standing real estate expert and investment consultant, we at Victor Investment support you with our individual advice and comprehensive services. We are also happy to determine all relevant values for you that you need to submit as part of your tax assessment declaration. We can also put you in touch with qualified tax advisors who will provide you with reliable support. Please contact us for a non-binding consultation.