The tax offices sent out the first notices for property tax. The horror is great. Anyone who does not want to accept this must act quickly now.
The couple from near Münster were horrified when they received mail from the tax office. It said “notice of real estate tax value”. The contents could be expensive. This is because it indicates the value that the tax authorities will assign to the couple’s property and land in the future. It is the basis for the amount of the reformed property tax that every property owner will have to pay from 2025. In the letter, the value for the two-family house in Westphalia is now nine times as high as it was previously: 34,000 euros has become 308,000 euros.
This does not yet mean that the property tax will also increase ninefold. This is because the property tax value is still multiplied by a measurement figure and the assessment rate of the municipality, and the hope is that the assessment rates will fall compared with today’s level. But first, it is not certain that they will be reduced far enough to avoid additional burdens, and second, there will definitely be losers who will have to pay significantly more than before. Property owners in good locations, with large plots of land and, in some cases, those with older buildings will be hit hardest. Only overall, property tax revenue is not expected to increase. The average property tax is around 340 euros a year. It flows to the municipalities.
Property valuations rise sharply
Many house and apartment owners are currently experiencing the same situation as the couple. Since July, they have had to submit a property tax return, providing information on area and use, among other things. They originally had until the end of October to do so, but the deadline has just been extended to the end of January. In August, the first property tax assessment notices were sent out on this basis, and there are now several hundred thousand. In the end, there will be many millions, because every property in Germany has to be revalued.
This is a consequence of the property tax reform, which made a ruling by the Federal Constitutional Court necessary. In some cases, the court found glaring injustices in the way property tax has been calculated to date. This is because it was previously based on land values from 1964 (western Germany) or even 1935 (eastern Germany), which were partly updated but never completely recalculated.
It is therefore not surprising that the new property tax values are now significantly higher than before. But a ninefold increase naturally raises fears about a much higher tax burden in the future. Property owners will know exactly in the course of 2024, when the municipalities will have set their new, hopefully lowered assessment rates and sent out the property tax notices. These will contain the amount of the new property tax that will have to be paid from 2025 onwards.
Standard land value and areas are decisive
Anyone who wants to avoid a sharp increase should take a closer look at the valuation notices that have now been sent out. If errors have been made, they must be corrected within four weeks of receipt. After that, the letters become legally binding. They contain all the information that has been included in the calculation. Any deviations from the declaration should then be corrected by filing an objection.
Particularly important parameters are the standard land value, i.e. the value of the land, and the areas assessed. The higher the value and the larger the area, the more expensive the property tax will be. If the taxpayer notices his own errors, such as an overstated residential or land area, he can adjust these by means of an error correction if they change the value by at least 15,000 euros.
Errors on the part of the tax office seem to have been virtually absent from the first notices. Accordingly, there is no reason for an appeal. This is confirmed by tax consultants as well as the owners’ association Haus & Grund and the Taxpayers’ Association in response to inquiries from F.A.S. “The property tax assessments we examined corresponded to the declarations submitted,” says, for example, Jürgen Lindauer, a tax expert at KPMG. And Heinrich Fleischer from competitor EY sees it the same way.