What the Term "Property Tax" Means

A new basis for calculation has been in effect since the 2025 property tax reform. The previous standard values have been replaced by new property tax values, with the specific assessment varying by state. As a result, the amount of property tax may change for property owners. Tenants often continue to pay the tax through their utility bill. The key factors determining the actual tax burden are primarily the value of the property, its location, and the municipal tax rate.

Anyone who lives in Germany or uses a piece of land pays property tax—even if they don’t own any real estate. This is because Property Tax B, which is levied every three months on developed and developable land, is also paid by tenants. Although the tax office collects the amount due from the owner, the owner can pass the entire cost on to the actual users. Those who rent therefore pay property tax as part of their utility bill. For anyone who has purchased an apartment as an investment, however, the tax does not represent a financial burden but merely involves some administrative effort.

Buyers of a traditional condominium, on the other hand, should factor it into their running costs to avoid being caught off guard by the tax office. With proper planning, however, property tax is a manageable expense compared to mortgage payments and other utility costs. This is unlikely to change much in the future, even though the tax is currently causing headaches for German tax authorities. In 2018, the Federal Constitutional Court ruled that Property Tax B, in its previous form, was unconstitutional because it violated the principle of equality. This stems from the assessed values assigned to real estate.

The calculation is quite complicated. For every piece of property in Germany, there are established unit values that serve as the basis for tax assessment. The main factors influencing this value are the potential rental income, the year the building was constructed, and its architectural style. The size of the municipality in which the property is located is also a key factor. Adjustments are made for special circumstances—a detached villa may be valued higher than a multi-family home of the same size.

Based on these details and through additional intermediate steps, the so-called property tax assessment base is calculated, which is then multiplied by an assessment rate. This rate varies from municipality to municipality. This is because, alongside business tax, property tax is the most important source of revenue for local governments, which is why they also have a say in determining the rate. Accordingly, the actual property tax amount varies greatly depending on where the property is located. For example, assessment rates in cities with 20,000 or more residents range from 80 percent in Ingelheim, Rhineland-Palatinate, to 910 percent in Witten, North Rhine-Westphalia. Size is not a determining factor here. Berlin, with an assessment rate of 810 percent, ranks among the top 10 in the country, while Germany’s second-largest city, Hamburg, has an assessment rate of 540 percent. It is important to note, however, that due to higher property values in Hamburg, the property tax liability there may still be higher than in Witten, even if two properties are very similar.