The property tax is a property tax that relates to property or heritable building rights. It is requested once a year by the municipality and is always tied to the property and not to the owner. Property tax is assessed based on the value of the property. A distinction is made between property tax A (agricultural), property tax B (structural) and property tax C (undeveloped land), which will apply from 2025.
What is the new property tax C?
Since the available living space is becoming increasingly scarce, especially in densely populated areas and metropolitan areas, plots ready for construction are increasingly becoming objects of speculation. Some of these properties are only bought to await an increase in value, to be overpriced and then sold again at a profit. In order to prevent this speculative business, the new property tax C was created especially for undeveloped, building-ready land. If these are not built on, municipalities can set a higher assessment rate in the future. Thus, the property tax C makes speculation more expensive and is intended to create incentives to actually create urgently needed living space on undeveloped land.
How does the calculation of property tax B work?
The property tax is made up of a standard value, property tax index and assessment rate, which are determined by municipalities and tax offices and used for the calculation.
For the calculation of property tax B, the so-called unit value for the property is first determined by the tax office. It is relevant for the amount of the value whether the property is developed or undeveloped. The value is the assessment basis for property tax. The unit value is calculated on the basis of the value of the land in the years 1935 (East Germany) and 1964 (West Germany). Since prices have changed a lot since then, the unit values are often below the real market values of the properties.
The type of property and the amount of the unit value determine the second factor: the property tax base. It determines which part of the unit value is taxable. Strict regulations from the property tax law apply to this.
The third calculation factor is the so-called assessment rate. It is a value set individually by municipalities that ultimately determines the tax burden. There are strong regional differences within Germany - especially between metropolitan areas and rural areas.
Can the landlord pass the property tax on to the tenant?
If an owner rents out his building, he does not have to pay the property tax himself. He can currently still pass them on to the tenants and settle them in the ancillary costs, since according to the Operating Costs Ordinance, they are considered a public burden on the building.
What is the difference between real estate tax and real estate transfer tax?
The property tax is often confused or equated with the property transfer tax. Both are two different types of tax. While property tax is taxed on property and has to be paid annually, property transfer tax is only due once and only when a new property is acquired.