Nasty surprise with property tax: Properties were often valued much higher than expected. Associations are alarmed.
The tax authorities are facing a wave of lawsuits in many federal states because of the recalculation of property tax. Constitutional lawyer Gregor Kirchhoff considers the federal law applied in eleven states to be unconstitutional. The lawyer came to this conclusion in a study commissioned by the Taxpayers’ Association and the Haus und Grund property owners’ association, which was recently presented in Berlin.
From 2025, the property tax will be recalculated. Not all states have to apply the same criteria: While most use the criticized federal model, Bavaria, Baden-Württemberg, Hamburg, Hesse and Lower Saxony have developed their own calculation methods.
Recently, due to the reform, thousands of property owners have had to submit a declaration to their tax offices with data on their land and house. This is because the value of almost 36 million properties has to be recalculated.
The land value is an average value that applies to one square meter of undeveloped building land in a specific location. It is determined by the property valuation committees and serves as the basis for the valuation of undeveloped land.
The higher the land value of the property, the higher the tax will be. This is currently causing headaches for many property owners, because the value of a property calculated in this way can differ greatly from the actual value.
Kirchhoff criticized the fact that the newly established federal land values were not comparable with the actual value of the property. For example, the sought-after residential area of Wannsee in Berlin received a lower guideline value than the less attractive location in the Berlin district of Neukölln.
In addition, individual circumstances such as monument protection requirements, construction defects, contamination and other factors are not taken into account when evaluating the property. The lawyer considers the calculation of property tax based on the land value to be generally problematic – compared to models that only take into account the area and type of building.
The associations now want to file model lawsuits in five federal states – in Berlin, Mecklenburg-Western Pomerania, North Rhine-Westphalia, Rhineland-Palatinate and Saxony. They recommend that the owners file an objection against the notices already sent by the tax offices regarding the value of their properties.
In most federal states, these notices form the basis for future property tax calculations. “It is obvious that the new property tax will not work and will ultimately lead to significant additional burdens,” said the President of the Taxpayers’ Association, Reiner Holznagel.
Around 15 to 20 million tax assessments have been issued since the documents were submitted. Many property owners have had a nasty surprise: the land values are often significantly higher than before.
“We have never had so many concerned taxpayers,” said Holznagel. The president of Haus und Grund, Kai Warnecke, reported an “insane influx of members.” What is very irritating for the owners is that there is no information on what they will actually have to pay in property tax from 2025.
This will remain open for a while. The amount of property tax depends crucially on the so-called assessment rates of the municipalities. However, these are only set at short notice. By then, however, it is often too late to defend yourself against the notices, warn the associations. They are appealing to the eleven federal states to break away from the federal government’s calculation model and to develop their own methods that they believe are less vulnerable.
