Property ownership in Germany has undergone a major tax reform. What is its essence and what obligations does it entail?
The year 2019 was a crucial year in Germany for the creation of the property tax reform. The justification for the reform stems from the fact that the amount of real estate and land tax was previously determined on the basis of the so-called "outdated" values from 1935 and 1964. These values have therefore fallen behind the actual development of property values, which has led to unequal treatment between property owners.
The goal of the reform is to recalculate the current tax rate or to determine the amount of property and land taxes fairly for all taxpayers
In order to determine the new tax, every owner of real estate or land is required to file a tax return. Property owners will also be informed of this obligation by the State, either by means of an invitation to file a tax return or by means of an information letter. The notices will be sent to property owners on a rolling basis from May 2022 to July 2022.
A property owner who sold the property during 2022 is also required to file a tax return. The crucial date for determining ownership of the property is January 1st, 2022.
The tax return may be filed on the following dates:
The taxpayer is legally obliged to file the tax return only electronically. One of the options for electronic filing is the online tax portal "Elster". Electronic forms for filing tax returns will be available on the Elser portal from July 1st, 2022.
If the property owner does not have the possibility to file the tax return electronically, a close relative can do it for him/her using his/her own registration in Elster.
In individual cases there are exceptions for filing a paper tax return, whereby the taxpayer must prove that neither he nor his relatives have the possibility to file electronically. For these cases, paper forms will be available at the local tax offices.
In case of joint ownership, only one of the owners shall file the tax return, while the other joint owners must be listed on the form.
The taxpayer is obliged to provide the following information about the property or land in the tax return:
The tax authorities will start calculating the new property tax amount once all tax returns have been received or once all the necessary data has been provided. The data will then be passed on to the municipalities, which will recalculate the tax amount by the end of 2024.
The new tax amount will be payable for the first time in 2025.
We will be happy to process your property tax return for you.