The citizens of Lorch in Hesse are the front runners: they have to pay so much more for property tax B than they did a few years ago than anyone else in Germany.

In 2021, the municipality in the Rheingau increased the collection rate from 685 percent to 1050 percent and thus raised it more than any other municipality in this country.

Originally, the property tax was supposed to rise even more to avoid debts, but after protests the municipal council backed away from it.

Despite this, Lorch in the Rheingau, together with Lautertal in the Odenwald, is one of the two places with the highest assessment rate.

Jan Hauser

Editor in Business.

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In times of need, many municipalities increase the assessment rates for property tax and trade tax, the revenue from which they have sole control.

Both are important sources of income for the municipalities.

Trade tax is only paid by companies and it relates to the company's profit.

Municipalities are sometimes reluctant here because low rates also attract companies and these are usually more mobile than the residents.

Property tax A is due for agricultural and forestry operations.

Property tax B is paid by the homeowner or tenant via the utility bill, and it hits everyone.

The property value is also used for the calculation, but the amount is determined by the assessment rate, which the municipality sets and often increases.

If the property tax rises, living on site becomes more expensive.

All municipalities received 400 million euros in 2020 from property tax A and 14.3 billion euros from property tax B.

A Hessian municipality also follows in the places with the highest assessment rate for property tax, behind Lorch and Lautertal: Ringgau increased the rate in 2020 from 560 to 960 percent.

Behind it is Bergneustadt in North Rhine-Westphalia with 959 percent and Bad Karlshafen in Hesse with 951 percent.

This is shown by an evaluation by the real estate data provider Empirica Regio among the 10,788 municipalities in Germany for the year 2021, which used and adjusted the latest values ​​from the statistical offices of the federal states and the federal government.

"The basic trend is upwards," says Jan Grade, Managing Director of Empirica Regio.

More than 900 municipalities have increased the assessment rate.

Some municipalities have increased their income so significantly: Hohenstein in the southern Hessian Untertaunus increased the collection rate from 475 to 735 percent in 2021, Sankt Augustin in North Rhine-Westphalia from 550 to 750 percent or the municipality of Deinste in Lower Saxony from 400 to 600 percent.

According to Grade, it is easy to see in which regions municipalities are more likely to be in debt.

Higher assessment rates than average can be found above all in North Rhine-Westphalia and in parts of Hesse (see map).

"In our analysis, we were able to identify a correlation between the property tax and the debt per capita in a community," he says.

Factors such as population growth and real estate price growth, on the other hand, played no role.

For example, some municipalities increase their assessment rates when they are in their state's aid programs to relieve debt - as does Lorch with the Hessenkasse.

For a partial debt assumption by the state government, a contribution from the municipality is usually required.

In many places, however, the property tax is currently less of a focus because of the increases and more because of the effort involved in recalculating it.

All homeowners have until the end of October to submit their data for the new property tax model to the respective tax office.

After that, the authorities will start calculating the new property tax, which will be due from 2025.

From then on, more recent real estate values ​​than before will be included in the calculation.

The recalculation of the property tax comes with a promise: the individual calculation will change, but overall the income for the state should remain at the same level.

Currently, the calculation is still partly based on old values, which date from 1964 in the west and from 1935 in the east.

The Federal Constitutional Court had warned that this was unequal treatment and had given politicians until the end of 2024 to complete the procedure.

Therefore, around 35 million properties in Germany are now being valued as of January 1st of this year.

These values ​​are included in the calculation, whereby the federal model is still based on the property tax value, tax index and assessment rate of the municipality.

However, some federal states, such as Bavaria and Hesse, have opted for their own model.

Despite all the increases, there are still low assessment rates - in rural areas in the north.

As in previous years, the 71 residents of the Schleswig-Holstein municipality of Christinenthal pay the lowest rate of 45 percent.

Then come Ingelheim in Rhineland-Palatinate with 80 percent and the municipalities in Schleswig-Holstein Dammfleth and Elisabeth-Sophien-Koog with 100 percent each.

In Hesse, Eschborn, with a collection rate of 140 percent, is still one of the ten lowest collection rates in Germany and is significantly cheaper than neighboring Frankfurt with 500 percent.

The big cities otherwise have 440 percent in Düsseldorf, 515 percent in Cologne, 520 percent in Stuttgart, 535 percent in Munich and 540 percent in Hamburg up to 810 percent in Berlin.

Sometimes it even happens that municipalities reduce the payment for their citizens.

Although Offenbach lowered property tax by 100 percentage points, it is still high at a rate of 895 percent.

For the residents of Lorch and Lautertal, that would also be a reduction that still seems far away.