New property tax: Shocking increases unsettle owners!

New property tax: Shocking increases unsettle owners!

New notices on property tax were recently published and are causing a lot of discussion among property and property owners. As the PNP reported that many owners were eagerly awaiting the notifications that would now provide clarity about their future payments. But the results are mixed: While some are allowed to pay less, others have to expect significant increases. A particularly drastic example is the case of Christian Schuhbeck, who received a 13-fold increase in the notice for his property in Kirchweidach and has already turned to the state parliament with a petition. But he referred the topic to the municipality, which is responsible for setting the assessment rates.

The new property tax calculation is based on a comprehensive reform process, which became necessary after a ruling by the Federal Constitutional Court in 2018. For example, the deadline for submitting property tax returns was originally January 31, 2023, but was extended to April 30, 2023 for Bavaria. These notices apply to the “federal model” of property tax, while some federal states have also implemented their own regulations. It is important that the first two notices, the property tax value notice and the property tax measurement notice, both come from the tax office and do not contain any request for payment. The final property tax assessment, which determines the amount to be paid, will be issued by the municipality and will be valid from 2025.

The calculation in detail

There are several steps involved in calculating property tax. First, the property tax value is determined based on factors such as standard land value, net rent or property area and type. The tax rate, which was reduced to 0.031% for residential properties, is then applied. In the final step, the municipalities determine the assessment rate, which influences the tax amount. These new calculations are set to become reality from January 1, 2025 and affect not only residential properties, but also undeveloped land, for which a higher assessment rate will be introduced to combat speculation.

The right to appeal is particularly important for owners. An objection to the property tax value assessment and the property tax assessment notice can be lodged within four weeks. It is important to ensure that errors in the first two assessments cannot be corrected by an objection to the final property tax assessment. The Ministry of Finance states that appeals are free - if they are rejected, a lawsuit can be filed with the Tax Court. Many homeowners associations are already planning model lawsuits to challenge the federal property tax model, particularly because there are doubts about the constitutionality of the regulations.

What does this mean for the future?

The property tax reform also has far-reaching significance for municipal financing. Every year, over 15 billion euros flow to cities and municipalities that are needed for schools, kindergartens, swimming pools and other infrastructure projects. The new system should be implemented by December 31, 2019 at the latest, but many old values ​​will remain valid until the end of 2024. The next main assessment of property tax values ​​is already planned for January 1, 2029.

Future changes to the property must be reported by January 31 of the following year. Owners are therefore well advised to obtain comprehensive information about their decisions and, if necessary, to lodge an objection in order to avoid drastic financial burdens. The Landlord1x1 shows that these objections can be submitted in writing or electronically and that numerous points should be taken into account when examining the decisions. Finally underlines the Federal Ministry of Finance that the reform corresponds to the new legal requirements and that tax collection by the municipalities is essential for local financial stability.