Property tax reform 2022 – property tax will be re-calculated

Breaking News: The deadline for submitting the property tax return has been extended! The property tax return must now be submitted by 31 January 2023.[a]

The German government has revised the calculation of property tax. As a result, all owners of land or real estate will be required to submit declarations of assessment, which must be completed electronically by all owners and submitted by October 31, 2022. But what exactly are the regulations and what values must owners provide?

The assessed values which were last determined in 1964 (in West Germany) and 1935 (in East Germany) form the basis of the calculation of the current property tax.[1]. With its ruling on 10 April 2018,[2] the Federal Constitutional Court gave the federal government a deadline of the end of 2019 to change the regulation of these values. 

1st January 2022 was chosen as the reference date for re-evaluating the approximately 36 million real estate units (plots of land / properties) to be calculated. For the calculation of the new property tax, all owners were requested via a public announcement to submit a so-called declarative statement by 31 October 2022 at the latest. 

There is no requirement for a separate request by the tax authority.[3]. The announcement can be found on Berlin’s website (www.berlin.de) 

Currently, forms for a declarative statement are not available. From 1 July 2022, it should be possible to submit a declarative statement. This should be submitted electronically through a portal, such as  “Elster.de” For submission or use of a portal, registration is required. This can take a few weeks, so registration should be initiated in plenty of time, if this has not yet been completed. 

In the Property Tax Reform Act, the federal model was specified. However, the legislature also incorporated a state flexibility clause, allowing the federal states to use their own guidelines. Berlin and Brandenburg have chosen to use the federal model.[4].

The federal model, and therefore the relevant model for Berlin and Brandenburg, stipulates the following regulations. As before, the property tax is calculated in three steps. 

  1. Step: Calculation of the property values – key factors are the value of the ground (land value) and the level of the statistically determined net rent (excluding added costs such as heating), which depends, among other aspects, on the so-called rent-level standard (“Mietniveaustufe”) of the town/district in question (the higher the rent-level standard, the higher the rent in a district tends to be).
  2. Step: Adjustment for increases in value which have taken place in comparison to the current values, which have not been updated since 1935 or 1964. 
  3. Step: Modification of assessment rates by local authorities: if, in individual districts, the revenue from property tax does change due to the re-evaluation, the local authorities may adjust their assessment rates.[5].

But which values must I as a property owner provide for the calculation of property tax? 

Initially, general information is required. Here, you must provide the following information. 

  • Tax number
  • Local tax office
  • Location of the plot of land (street and house number)
  • Land-register sheet (optional)
  • Lot number
  • Area of the plot of land
  • Proportion of co-ownership[6]

Further information must be provided regarding the plot of land. Here, the following information must be collected. 

  • Property Size
  • Building space 
  • Building age 
  • Type of use
  • Standard land value

But where can I find this information? 

You can find your tax number and your local tax office in previous documents / notices from the tax office. 

You can request the standard land value for free from the Boris Berlin portal. For this, only the address of the relevant unit is required. Boris Brandenburg can be used to find values in Brandenburg. 

The purchase contract, the declaration of division or the land-register sheet will provide the remaining information necessary to prepare the declarative statement. 

If you need tax advice, please contact your tax advisors, as only they are permitted to provide this advice. 

If you need help to collect this information, your property-management company can help you. They should have access to all the information required. 

If you are struggling to source individual values, we are happy to explain where you can find this information. 

We always aim to advise and inform our customers as best as possible. The ADEN Immobilien team is happy to help you with any questions related to your property. 

Yours faithfully, 

Your Lars Drewes 

Head of Sales 

ADEN Immobilien - Your estate agent for Berlin and Paris 

Legal note: This article does not constitute tax or legal advice in individual cases. Please have the facts of your specific individual case clarified by a lawyer and/or tax advisor.

Photo ©  chris77ho (Christian Horz) / Depositphotos.com

[a] https://www.bundesfinanzministerium.de/Web/EN/Home/home.html

[1] https://de.wikipedia.org/wiki/Einheitswert

[2] https://www.bundesverfassungsgericht.de/SharedDocs/Entscheidungen/DE/2018/04/ls20180410_1bvl001114.htm

[3] https://www.berlin.de/grundsteuer/berlin/artikel.1182343.php

[4] https://www.haufe.de/thema/grundsteuerreform/

[5] https://www.haufe.de/thema/grundsteuerreform/

[6] https://www.berlin.de/grundsteuer/

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