Status: 03/10/2023 10:39 a.m
The tax offices have to re-evaluate around 36 million properties. Owners and tenants fear a drastic increase in property taxes. Experts advise, as a precautionary measure, to appeal against decisions – which is currently happening very often.
André G. from Berlin has already struggled through the forms and Elster software because of the property tax. The answer from the tax office came as a shock to him.
So far, the homeowner had to pay property tax of around 220 euros per year. According to the new calculation, it should be 901 euros a year. That would be quadruple. But André G. does not know whether it will really be that hard. He complains about the lack of transparency: “With these documents, it’s difficult to determine your own tax burden.”
Already more than a million objections
A lack of transparency is just one of many reasons why 1.3 million objections to the new decisions have already been received by the tax offices nationwide. And there is no end in sight.
The federal chairman of the German tax union (DSTG), Florian Koebler, says that there is almost a “tsunami of objections” that is prevailing in the offices. “At the moment, each tax office receives an average of 50 to 70 objections every day. It’s an incredible amount of work for the colleagues.”
And many lawsuits could end up before the constitutional court, which commissioned the major property tax reform decades ago.
Cash-strapped municipalities could hit taxes
The future property tax consists of the value of the property, the standard land value per square meter and the so-called assessment rate. It is determined by the municipalities, which is why there are strong regional differences. After the age-old standard land values have been adjusted, the municipalities have to redefine the assessment rate.
It is always said that the property tax revenue would be “revenue-neutral”, i.e. remain the same. But most municipalities are so cash-strapped that property taxes will probably rise significantly for many from 2025 onwards.
However, Jochen Brückmann from the Association of German Property Users warns: “What has been forgotten is that people in their own four walls often have to make do with little money. Think of households with two pensioners or young families who just have one Built a house, took out a loan. Money is tight there too.”
Calculation basis difficult to understand
The constitutional lawyer and tax expert Gregor Kirchhof, professor at the Institute for Economic and Tax Law at the University of Augsburg, also finds the inequality of the federal states problematic. Seven countries have their own tax models, and the so-called federal model applies in nine countries. In the case of the latter, for example, the year of construction is one of the most important elements for calculating property tax.
“If you compare a Gründerzeit villa with a modern passive house from the 1990s and a concrete block from the 1970s, then the value is based less on the year and more on the specific property. And so frictions have arisen.”
The so-called standard land values are sometimes similarly incomprehensible. They are determined by expert committees based on current purchase prices for real estate.
The prefab neighborhood in East Berlin now has a higher standard land value of EUR 1,300 than the villa area on Wannsee, which has EUR 1,200 – an absurdity of the federal property tax model. The association Haus und Grund wants to sue against this. Because in addition to the arbitrary standard land values, the tax office also calculates theoretical rental income, even if you use the house or apartment yourself.
Sibylle Barent from Haus und Grund Germany says: “We often have the phenomenon that what could be achieved in terms of rent or what is actually in the rental agreement is completely different – often lower – than what the tax office uses .”
Garden or house – everything is taxed equally
There is also trouble with the new property tax in Baden-Württemberg with the retired couple W., who bought their own home with a garden in Stuttgart-Kaltental 21 years ago. Now Maria W. feels punished with the new property tax: Her garden is “valued just like the built-up property, although of course we contribute a lot to nature conservation here”.
Because with the so-called “land value model” for the property tax in the Ländle, only the area with the new land values counts. What’s on it doesn’t matter at all. And so it can actually happen that in the future, huge apartment buildings or large villas will have to pay exactly the same property tax as “Grandma, her little house”. If the municipality does not lower the tax rate, it will be dramatically expensive.
Eike Möller from the Association of Taxpayers in Baden-Württemberg says: “Meanwhile, citizens are beginning to realize just how heavy the burden of the reform will be.” Many citizens worried about what to expect: that they would be financially overburdened or that they would no longer be able to hold the property at all.
One month to appeal
That is why the taxpayers’ association advises to lodge an objection against the new property tax assessments as a precautionary measure. There is only a month to do this after the notification has been issued.
It would be easy to take some pressure off the boiler, says Florian Köbler, the federal chairman of the German Tax Union: “The whole thing could be changed relatively easily by providing these property tax assessment notices with a provisional note. So that the individual citizens with regard to no longer have to object to the constitutional question, because really everyone enjoys the protection of provisional status.”
So far, however, these calls for help and proposals have been ignored by both the Federal Minister of Finance and the federal states. Experts like Gregor Kirchhoff think that’s not particularly wise: “The property tax will not be levied until 2025, but we have already collected an incredible amount of data. And we should use this wealth of experience to pause and consider how we can still improve the laws and make necessary constitutional corrections. And then hopefully many procedures will be avoided.”
Until then, the owners of real estate have only one thing to do: file an objection as a precaution.