Federal Finance Minister Christian Lindner has rejected improvements to the property tax reform, which will be fully effective from 2025, which would enable municipalities to make a greater differentiation between developed and buildable residential and commercial areas. A federal regulation cannot be implemented in such a short time, the FDP politician said in a letter to Rhineland-Palatinate and North Rhine-Westphalia that was distributed in Berlin on Tuesday. The reason for this was that the new property tax in some municipalities could lead to a shift in the burden in favor of commercial properties and at the expense of single-family homes, for example. Instead, Lindner called on the states to make changes to state law.
The 2019 reform leaves enough scope to deviate from the federal model. Next year, property tax, which is solely due to municipalities, will be levied on the basis of the reform for the first time. Millions of properties have been revalued for this purpose. The declared aim of the reform was to secure the municipalities’ income in the long term, but not place an increased burden on citizens as a whole.
“The federal government continues to expressly share the goals,” wrote Lindner. He encourages the states to “actively exploit necessary changes in state law.” In a letter to Lindner, North Rhine-Westphalia and Rhineland-Palatinate called for a federal regulation that would give municipalities the option to set different assessment rates for undeveloped land as well as residential and non-residential land as part of property tax B.
Further legislation by the states should be avoided. The property tax assessment rate is set by the municipalities as a percentage and serves as a factor that is multiplied by the so-called property tax measurement amount to determine the amount of the property tax.