Property tax in Germany

Anyone who owns property in Germany pays an annual property tax (Grundsteuer) on its assessed value.

These include, for example

• developed and undeveloped land,
• condominiums,
• multi-family housing,
• industrial buildings as well as
• agricultural and forestry operations

 Real property tax (Grundsteuer) is payable to your local tax office (Finanzamt), this annual municipal tax is a sources of municipal revenue and is mandatory for all property owners in Germany. 

Property tax reform

The preparation of the reform of the property tax in Germany starting in 2025 is already “underway.” Approximately 36 million properties must be revalued for the purpose of levying property tax.

Both individuals and companies are already obligated this year, i.e. in 2022, to collect a fair amount of data regarding their assets and then submit an assessment return.

Due to the property tax reform, property tax will increase in importance, especially also in relation to real estate transactions. On the one hand, the property valuation regulations will partially vary across Germany’s states. On the other hand, property taxpayers will have new disclosure obligations to meet after the property tax reform.

What is the goal of the property tax reform?

The values of residential locations and conditions of use have drastically changed since the standard values were established in 1935 and 1964, as a result, an owner in a high-demand residential area might pay significantly less property tax than the owner of a comparable property in a similar location. This has led to an inequality that has repeatedly led to legal disputes. The aim of the property tax reform is to make the property tax calculation more fair with the help of new legislation. In the future, property tax is to be based on the actual value of a property – this includes not only its size and construction year, but also its location.

New calculation bases from 2025

Property tax is being reformed in Germany, and new calculation bases will apply from 2025. The standard value, which has served as the basis for calculation to date, will be abolished as part of the reform. Until 2025, however, property taxes will continue to be levied on the basis of outdated standard values.

Property tax declaration mandatory for revaluation

For the new method of calculating property tax, the tax authorities require certain data from the owners. To calculate property tax as of 2025, new property tax values shall therefore to be determined on the basis of the data collected, replacing the outdated standard values. In order to collect the data, it is necessary to submit an assessment return to the tax office.

Property owners may be obligated to specify, for example,

• The land register data,
• The ground value,
• The file number of the standard value and
• Property Size
• The living or usable area
• Building age
• Type of use

Property Tax: valuation models differs from states to state 

In Germany 1 of the 16 federal states apply the federal model (two of them with different measurement figures), the other five rely on their own solutions, for example, an area-factor model or an area-location model. Depending on the model, different data must be provided to different extents. For owners of real estate in several federal states.

Depending on the model, different data must be provided to different extents. For owners of real estate in several federal states.