New property tax comes with its own variants depending on the federal state
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The property tax on the ownership of land and buildings must be reorganised. Unlike the one-time land transfer tax, property owners pay it annually. Landlords can pass on the property tax to their tenants via the service charge bill. Property tax is one of the most important sources of revenue for municipalities.
Until now, property tax was calculated on the basis of standard values from 1964 or 1935. This practice was declared unconstitutional by the Federal Constitutional Court in 2018. It criticised that the values used as a basis did not adequately represent the actual development of values.
The federal government therefore decided on a new regulation in 2019, the so-called federal model. According to this, the property tax is to be retained as a source of revenue for the municipalities and is to be implemented as unbureaucratically as possible. The three-stage procedure consisting of valuation, tax assessment amount and municipal assessment rate will be retained. The valuation of land under the new law is to take place for the first time on 1 January 2022. However, the federal states still have until 31 December 2024 to deviate from the federal model and prepare their own regulations. The new regulations will then apply from 1 January 2025. Until then, the previous law will apply.
In the meantime, some federal states have developed their own models. In Lower Saxony, land tax is to be calculated according to the actual value of the land, Hesse has announced an area-factor model, Baden-Württemberg is the first federal state to adopt a modified land-value model, and Bavaria has opted for its own "pure" area model. About half of the federal states are still working on a model. Berlin, Thuringia, Rhineland-Palatinate, Bremen, Saxony-Anhalt, Brandenburg and Schleswig-Holstein want to adopt the federal model, some of them with deviations.
(Photo: © Holger Kraft, Pixabay)