The new property tax: it's time for landowners to act

On paper there is still time until 2025, when the new property tax will apply.

But before then, millions of properties will have to be reevaluated.

In practice, time is already running out in some cases.

Jan Hauser

Editor in business.

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However, many companies still feel they are far from being prepared for the property tax reform. This is announced by the management consultancy KPMG, which surveyed around 300 companies. Accordingly, three out of four companies consider the reform to be “complex” or “very complex”. Only every tenth company feels “well informed”. But the new property tax is not the only thing that affects them - private owners also have to pay it and prepare for the changeover.

Jürgen Lindauer, Director Tax at KPMG, already sees the time to act urgently for property owners.

Although the property tax reform will not come into force until 2025, around 36 million properties nationwide will have to be revalued by January 1, 2022.

From the turn of the year the big reform for the property tax starts.

"Because from July 1 of next year, the declarations of assessment for the property values ​​must be submitted electronically," says Lindauer.

First and foremost, this means that a large amount of data has to be obtained.

"In many cases, however, this is not available at all or not in the required format."

Everyone pays property tax

The property tax is one of the most important taxes in cities and municipalities, the amount of which you can determine yourself. In 2019, the municipalities received 14 billion euros through property tax B, which applies to land. That was 1.7 percent more than in the previous year. First of all, the property owner pays for it. If the house is rented out, however, he will pass the expenses on to the tenants. With the income, the local communities can expand the infrastructure and operate kindergartens, libraries and swimming pools.

So far, the calculation of the property tax has been based in part on old property values, which date from 1964 in the west and from 1935 in the east. The old values ​​lead to unequal treatment, as the Federal Constitutional Court has ruled. As a result, a new assessment base and a new property tax law had to be created that allowed the federal states to deviate from this.

The federal states still have time until the end of the year to get everything wrapped up.

Bavaria has just passed its own property tax.

There, only the size of the property and the type of use of the area count, but not the location.

On the other hand, rely on the federal model, which takes the value of the property into account: Brandenburg, Bremen, Mecklenburg-Western Pomerania, North Rhine-Westphalia, Rhineland-Palatinate, Saxony-Anhalt, Schleswig-Holstein and Thuringia.

The other federal states deviate from this, have developed their own models or have not yet completed the procedure.

Is it too late now?

Hans Volkert Volckens, Head of Real Estate and Asset Management at KPMG, criticizes the fact that the various country rules hardly relieve not only the companies but also the tax authorities. "For many companies whose real estate extends across different federal states, the different country models make the situation even more difficult," he says. The number of employees who deal with activities relating to property tax in companies is surprisingly low. Only one or two people take care of more than half. "That is alarming."

According to the survey, one in five companies has started collecting data. Every third person says they have not yet planned one. Volckens sees the challenges in detail. Companies with larger properties in particular cannot measure their properties themselves, but would have to employ external experts. But that needs advance notice. “It's time to pay more attention to property tax,” he says.

Changes to land and real estate that take place after January 1, 2022 must be reported to the tax authorities within certain deadlines.

This includes conversions, extensions, changes in use and much more.

Lindauer warns of the consequences: "The notifications are a tax return, so any failure can quickly have unpleasant consequences." one month.

This could make it tight.