In the course of the property tax reform, around 36 million properties in Germany will have to be revalued. Owners will have to file an additional tax return as early as July 1, 2022. Experts criticize the procedure and warn of data chaos. Who is affected and what must be taken into account?
As a result of the property tax reform adopted in 2019, owners are already required to submit an additional tax return this summer. The new calculation basis had become necessary because the Federal Constitutional Court had demanded a corresponding new regulation from the legislature due to the now outdated data basis. To ensure that tax offices have sufficient time for calculation and to enable the new property tax to come into force on time on January 1, 2025, the authorities already need information on properties, houses and residential units. The Federal Ministry of Finance says that the implementation of the reform for tax authorities is one of the biggest projects in Germany's post-war history.
Property owners of land, freehold apartments or agricultural and forestry businesses must submit a tax assessment declaration to the tax office electronically via the ELSTER tax platform between July 1 and October 31, 2022. Leaseholders as well as building owners whose buildings are located on land owned by others are also required to file - with the cooperation of the respective owners. Since the activation at ELSTER can take up to two weeks and surcharges are to be expected in case of delay, it is advisable for owners to take care of the submission early. The deadline for all declarations was January 1, 2022, and any changes made after that date do not have to be taken into account. In the future, the amount of property tax will then be calculated on the basis of the submitted declaration - the new property value will replace the old standard value of the property as a factor.
The amount of property tax due in the future and the information required vary from state to state. In most cases, however, the land area and living space, the type of building, the year of construction and the standard land value are decisive for the calculation. While Berlin, Brandenburg, Bremen, Mecklenburg-Western Pomerania, North Rhine-Westphalia, Rhineland-Palatinate, Saxony-Anhalt, Schleswig-Holstein and Thuringia have joined the so-called federal model, according to which the value of the land is decisive, the other federal states have enacted their own laws, in some of which the value of the land is not crucial. Under the federal model, the land value is determined using the capitalized earnings value method for residential buildings and the asset value method for buildings used for business purposes. You can find more detailed information about the regulations in your federal state at www.grundsteuerreform.de.
The actual amount of property tax depends on the assessment rates of the municipalities for which the tax is an important source of revenue. Theoretically, the assessment rates can range from 0.0 to more than 1,000 percent. Although municipalities in Germany are required to keep their revenues at roughly the same level, there is no obligation to do so. For most apartment owners, the property tax amounts to a few hundred euros a year, while owners of rental properties usually end up with four-digit amounts. How much will be due in the end, and whether owners will have to pay more or less, will not be known until 2025.
Both tax consultants and associations such as the owners' association Haus und Grund criticize the planned approach. Due to the lack of an obligation to contact homeowners directly, many of them would not know about the declaration of assessment to be submitted. There is also criticism of the fact that property owners will have to provide the necessary data. For example, determining the age of a building is difficult, since structural renovations must be considered as well. In addition, the non-uniformity of the federal states is considered to be a complicating factor by tax consultants. Owners can seek support from tax consultants and industry associations.