- In the video: Property tax returns are missing after the deadline, but none are received
In the new year, homeowners will know how much property tax they will have to pay in the future after the fundamental reform. According to initial calculations, municipal associations are sounding the alarm and urgently warning of extreme pressure on residential properties. But the new property tax, which will apply from 2025, is already casting its shadow.
Many municipalities had already increased assessment fees before the reform. This follows from an evaluation by the German Chamber of Industry and Commerce. Consequently, 104 municipalities have increased property tax B tax rates starting in June 2023 compared to 2022, and property owners could be even more affected next year.
These are the greediest municipalities in Germany
In 26 municipalities the evaluation rate increased between 20 and 49 percent, in 38 municipalities between 50 and 100 and in 17 municipalities even by more than 100 percentage points. The absolute maximum value is the increase of 345 percentage points in Bad Homburg vd Höhe (Hesse), followed by Xanten (North Rhine-Westphalia) with an increase of 200 points and Oberursel (Hesse) with an increase of 197 points.
The 20 municipalities with the greatest increase can be found here:
By the way, Gladbeck (North Rhine-Westphalia) has the highest factor with 950 percent and Oberursel (Hesse) with 947 percent.
Testing rates fell in these communities.
At least eight municipalities (twice as many as in 2022) have reduced the B property tax rate this year. These include Freudenstadt (Baden-Württemberg), Troisdorf (North Rhine-Westphalia) and Duisburg (North Rhine-Westphalia ).
You can find the eight municipalities with the greatest reductions here:
Ingelheim (Rhineland-Palatinate) again has the lowest evaluation rate, at 80 percent. Screening rates are also low in Eschborn (Hesse, 140 percent) and Verl (North Rhine-Westphalia, 180 percent). Evaluation rates are below 200 percentage points.
Property tax reform could cause cost explosion
“ The goal is for cities and municipalities to be able to send new property tax settlements to owners in 2024,” says Uwe Zimmermann, Deputy CEO of the German Association of Cities and Municipalities, in response to a question from FOCUS online. The prerequisite is that municipalities receive, if possible, all the results of the property revaluation from the tax offices of the state tax administration in the first half of 2024. And further: “Only then can cities and municipalities start to redefine the property tax assessment rate and, on this basis, introduce new property tax assessments.”
Meanwhile, the Association of Cities and Municipalities of NRW is already expressing major concerns: “Calculations in the municipalities are already underway. And they point out a big drawback: according to the figures measured so far, this is a massive change to the detriment of private owners,” said the president of the association, Christoph Landscheidt, mayor of the city of Kamp-Lintfort. Residential properties would be significantly more burdened than commercial properties. It cannot continue like this: North Rhine-Westphalia must urgently take countermeasures. “In my opinion, any additional burden on citizens can no longer be justified.”
The NRW Cities Association had previously called for a correction. CEO Helmut Dedy said that the reform must be prevented from leading to a shifting of burdens between residential and commercial properties and that residential properties suffer more burdens than commercial ones. “Using the state's own metrics, the state can and should act quickly here. We hope that the federal government will increase the property tax figures for commercial properties and thus avoid these systematic additional burdens for tenants and apartment owners,” demanded the association representative.
What is property tax reform?
On April 10, 2018, the Federal Constitutional Court decided that the previous method of calculating property tax is no longer valid. To implement this ruling, the federal government has launched property tax reform, which is enshrined in three new laws.
The first law concerns the revaluation of all properties in Germany from January 1, 2022: owners had to submit an electronic declaration to the tax office about the value of their property.
The second law allows municipalities to tax more non-developable but buildable land starting in 2025 to promote the development of these areas.
The third law modifies the Basic Law to establish the federal government's responsibility for property taxes, but leaves it up to the states to regulate them themselves. Five states have taken advantage of this option and introduced their own regulations, while Saarland and Saxony basically follow the federal model, but have set their own tax figures.
“The property tax has no dynamics and does not grow with prices. Therefore, it is necessary to increase tax rates to align tax revenues with wages and incomes, for example,” says Stefan Bach, tax expert at the German Institute for Economic Research (DIW). Property and business taxes are important sources of revenue for municipalities to fund various local services and projects. These taxes contribute significantly to the financial autonomy of municipalities, allow the implementation of infrastructure projects, the provision of educational opportunities and the promotion of culture.