Property tax: The new property tax values will apply from 2025

The submission of property tax returns caused quite a stir in 2022, as many citizens felt overwhelmed by the effort involved. To this day, there are many critics who believe that determining the property tax value according to the federal model is unconstitutional and also fear a massive increase in tax.

Following a ruling by the Federal Constitutional Court in 2018, property tax had to be reformed. The recalculated property tax will apply from 2025. Property tax is a real tax on land, but also on heritable building rights, which is payable by the owner. It can be passed on to tenants and is an important source of income for local authorities. In 2022, the nationwide revenue was around 15 billion euros.

Around a year after the deadline, more than one million property tax returns are still missing in Germany. The deadline for submitting property tax returns was originally set for the end of October 2022, but has been extended in many federal states. In Berlin, Rhineland-Palatinate and North Rhine-Westphalia, lawsuits against property tax have been filed with the fiscal courts with the support of Haus & Grund Deutschland and the German Taxpayers' Association (BdSt). In addition, both associations are supporting an objection procedure as a test case against two property tax assessment notices due to doubts about the constitutionality of the valuation. These proceedings are pending before the Federal Fiscal Court (BFH, Ref.: II B 79/23 and II B 78/23).

The actions before the fiscal courts and the proceedings before the Federal Fiscal Court are directed against the notices of assessment of the property tax value according to the federal model. Property owners can refer to this model action and, if necessary, lodge an objection against their assessment notice with the tax office and apply for the proceedings to be suspended for reasons of expediency. The objection period is one month.

However, until the question of constitutionality has been clarified by the highest court, the municipalities will generally reassess the property tax as of 1 January 2025 on the basis of the currently determined property values and the resulting property tax assessment amounts. The assessed values are initially to be paid by the property owners.

(Photo: © Hans Rohmann, Pixabay)