Real Estate: How much property tax do I have to pay?

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How much property tax do I have to pay?

Many homeowners are at risk of a nasty surprise when it comes to property taxes. (Archive image) Photo: Jan Woitas/dpa/dpa-tmn

Many homeowners are at risk of a nasty surprise when it comes to property taxes. (archive image) photo

© Jan Woitas/dpa/dpa-tmn

Anyone who owns a property has to pay property tax. The amount can vary greatly – and very few people know how much it will be in the coming year.

When it comes to property tax There are big differences in real estate between German cities. For a similar single-family home, owners in one town sometimes pay several hundred euros more than in the neighboring town, as a recent study shows. At the same time, most of them still don’t know how expensive it will be in the coming year. Because then the property tax will be calculated according to a new method.

Property tax reform takes effect from January

The Federal Constitutional Court has demanded this reform because the calculations are currently based on completely outdated property values ​​- in East Germany with values ​​from 1935 and in West Germany from 1964. In the future, different methods will apply in the federal states, some of which are highly controversial. The first lawsuits are already underway. What remains, however, is that the municipalities will continue to have the final say with their assessment rates.

Property tax is one of the most important sources of income for municipalities. Before the Corona crisis, it covered around 15 percent of its tax revenue, which is then used to pay for roads, swimming pools and theaters. It is an annual tax on the ownership of land and buildings – but a landlord can also pass it on to tenants via the utility bill. How much you pay depends on the property, the building on it and the municipal assessment rate. For most apartment owners it’s a few hundred euros a year, while for owners of apartment buildings it’s often four-digit amounts.

Most recently an average of 499 euros per year

The consulting company Institut der Deutschen Wirtschaft Köln Consult examined the situation in the hundred largest German cities on behalf of the Haus und Grund owners’ association. Most recently, 771 euros were due annually for a typical single-family home in Witten, North Rhine-Westphalia, but only 335 euros in Regensburg, Bavaria.

According to the information, the second cheapest city is Koblenz, followed by Erlangen, Ulm as well as Düsseldorf and Ratingen, which share fifth place. The second most expensive city is Offenbach am Main, slightly less expensive are Mülheim an der Ruhr, Darmstadt and Duisburg.

On average, the property tax in the hundred cities examined was 499 euros per year, which corresponds to an increase of 4.5 percent compared to the last study in 2021.

Only Duisburg lowers the assessment rate

In 26 of the cities examined – i.e. in more than a quarter – the assessment rate has been increased since 2021. Only Duisburg lowered it. Bavaria is one of the cheapest federal states with an average property tax amount of 419 euros. Homeowners in Berlin, on the other hand, paid an average of 686 euros. There were significant increases, particularly in Rhineland-Palatinate. The authors of the study based their ranking on the property tax rates of the 100 largest cities from June 2024.

Very few homeowners know how much they will have to pay next year – after the reform comes into force. The president of the Haus und Grund owners’ association, Kai Warnecke, complained in “Bild am Sonntag” that around 90 percent of property owners lack this information. “This is absurd and a real state failure, after all the state had almost six years to reform,” he said. Warnecke warned that millions of households would have to expect significantly higher costs because, given the empty municipal coffers, the municipalities could become more burdensome.

dpa

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