Revised municipal property tax rates across the 100 largest urban areas
Germany's Grundsteuer Reform: A New Era of Property Tax Variations
As Germany prepares for the implementation of its Grundsteuer (property tax) reform, effective from January 1, 2025, the country is gearing up for a significant shift in property tax burdens across its cities. The reform, aimed at updating the outdated valuation system from 1935/1964, will see all properties reassessed based on current property values and characteristics[1][5].
Under the new federal model, properties in several federal states, including Berlin, Brandenburg, Bremen, Schleswig-Holstein, North Rhine-Westphalia, Rhineland-Palatinate, Thuringia, Saxony-Anhalt, and Mecklenburg-Vorpommern, will be subject to the new valuation rules[1]. However, municipalities retain the power to set their own assessment rates ("Hebesätze"), leading to considerable variations in effective property tax rates across different municipalities[2].
The variations in property tax rates among cities are significant. In the 100 largest cities examined, the Grundsteuer tax rates have increased in 26 cities since 2021[2]. For instance, the average Grundsteuer tax rate in the 100 largest metropolitan areas is now 589%, an increase of 25 percentage points compared to 2021[2].
Berlin, which uses the federal model to calculate base values but sets its own multiplier, has seen significant increases for many property owners, especially for rented properties[5]. On the other hand, Duisburg is the only city to have reduced its Grundsteuer tax rate[2]. In Witten, the annual Grundsteuer burden for a comparable single-family home is 771 euros, while in Regensburg, it is 335 euros[2].
The new Grundsteuer ranking by the Haus & Grund association indicates that the annual Grundsteuer burden for a typical single-family home varies significantly across cities and regions[2]. Kai Warnecke, President of Haus & Grund, has expressed concern about the development of municipal tax rates, stating that the current transition of the Grundsteuer to a new calculation method must not be used to fill municipal coffers[3].
It's important to note that approximately 90% of the owners of around 36 million properties in Germany are unaware of the 2025 tax rate under the reform[4]. Some municipalities, such as Bavaria, Hamburg, Hesse, and Lower Saxony, will use a "simplified" Grundsteuer valuation model from 2025[1]. Meanwhile, Baden-Württemberg has chosen a deviating special path, where only the land of the property, not the buildings, will be valued under the new Grundsteuer system[1].
In Saxony and the Saarland, a modified federal model for the Grundsteuer has been implemented[1]. Most municipalities have not yet published their key tax rates for the reform[2]. The Grundsteuer Reform is nearing completion and is set to launch in the near future, dividing Germany once again in terms of property tax burdens, 35 years after reunification[1].
References:
[1] "Grundsteuer-Reform geht in Kraft: Das sind die Änderungen für Eigentümer und Mieter" - Spiegel Online [2] "Grundsteuer-Reform: Die neuen Steuersätze der 100 größten Städte" - Handelsblatt [3] "Grundsteuer-Reform: Haus & Grund-Präsident Kai Warnecke kritisiert Entwicklung von Steuersätzen" - Frankfurter Allgemeine Zeitung [4] "Grundsteuer-Reform: 90 Prozent der Eigentümer wissen nicht, was sie zahlen müssen" - Wirtschaftswoche [5] "Berlin: Die Grundsteuer-Reform hat viele Mieter in die Knie geworfen" - Tagesspiegel
- In the realm of finance and business, the Grundsteuer Reform, set to launch in 2025 in Germany, will significantly impact property tax burdens across various cities.
- The variations in property tax rates under the reform, as highlighted by the Haus & Grund association, will lead to considerable differences in the financial burden for property owners across different municipalities.
