To All Property Owners: Property Tax Reform
I. Summary
1) The new property tax regulations will come into force on January 1, 2025. Consequently, the assessed value will no longer be valid as a basis for calculation.
2) For all approximately 36 million economic units of real estate, new assessment bases for property tax purposes must be determined starting from 2025.
3) The previous procedure for calculating property tax remains unchanged: Property tax value (determined by the tax office based on an assessment declaration) x Tax assessment ratio (legally defined) x Assessment rate (determined by the city or municipality) = Property Tax.
4) In the area of the so-called Property Tax A (agricultural and forestry assets / agricultural and forestry businesses), most federal states implement the federal model, which was introduced with the Property Tax Reform Act.
5) In the area of the so-called Property Tax B (real estate / land), the federal states of Saarland and Saxony only deviate from the federal model in the amount of the tax assessment ratios. The federal states of Baden-Württemberg, Bavaria, Hamburg, Hesse, and Lower Saxony, however, apply their own property tax model.
6) In a main assessment as of January 1, 2022, new property tax values must be determined, which will form the basis for property tax from the calendar year 2025.
II. What Needs to Be Done – We Are Happy to Assist You!
1) For residential properties, the following information is essentially required: a. Location of the property,
b. Plot size,
c. Standard land value,
d. Type of building,
e. Living area,
f. Year of construction of the building.
2) Property owners submit this information to their tax office in an assessment declaration. The decisive factor for all information is the status as of the cut-off date January 1, 2022.
3) The request to submit the assessment declaration is expected to be made by public announcement at the end of March 2022. The assessment declarations to be submitted electronically can be filed via the online tax platform ELSTER from July 1, 2022. The current submission deadline is October 31, 2022.
4) Further steps: a. Based on the information in the property tax declaration, the tax office calculates the property tax value and issues a property tax value notice, and calculates the property tax assessment amount based on a legally defined tax assessment ratio and issues a property tax assessment notice.
b. Both notices are not payment demands. They form the basis for the assessment of property tax by the city or municipality.
c. The assessment rate should be adjusted by the cities and municipalities in such a way that the property tax reform is as revenue-neutral as possible for the respective city or municipality.
d. The newly calculated property tax is to be paid from 2025 based on the property tax notice; until then, existing regulations remain in force.
