AMillions of homeowners will be faced with a kind of second tax return in the summer because of the new property tax calculation. You have to report data such as years of construction, living space and land values to the tax authorities. But the documents for this could sometimes be difficult to obtain, fear associations. You think: homeowners need to be given significantly more time for their property tax return.
“Owners need data for the tax return, which they usually do not have immediately at hand,” said the President of the Haus und Grund owners’ association, Kai Warnecke, of the German Press Agency. Above all, those who have inherited their house or property could have problems finding the documents together. In addition, the owners are unlikely to find any professional assistance such as architects or tax consultants for the necessary research. Therefore, Haus und Grund, together with the taxpayers’ association, is calling for the deadline to be extended by three months to the end of January 2023.
The reform of the property tax was decided more than two years ago after the Federal Constitutional Court had demanded a new regulation. Until now, the tax authorities have calculated the value of a property on the basis of completely outdated data. From 2025, a new method of calculation will apply. But before that, almost 36 million properties in Germany have to be revalued. The tax authorities are facing one of their biggest projects in post-war history.
Property tax is one of the most important sources of income for municipalities. Before the Corona crisis, it covered around 15 percent of municipal tax revenue, which is used to pay for swimming pools or theaters, for example. It is paid by every land and property owner – but a landlord can pass it on to the tenants via the utility bill. For apartment owners, it is usually a few hundred euros a year, for owners of larger apartment buildings it can also be four-digit amounts.
There are some pitfalls
For the new calculation, the tax offices now need information about the property and the building, i.e. floor numbers, official areas, district numbers – but also living areas and land values. Depending on the federal state, sometimes more or less information may be required because the states use different calculation models. According to current plans, the property tax return can only be submitted between July 1st and October 31st – with a few exceptions online via the Elster tax platform.
“Here the owners are threatened with an XXL bureaucracy,” warned the President of the Taxpayers’ Association, Reiner Holznagel. He called for timely information letters to the house and property owners, which also contain information and assistance for the declaration. Several federal states only wanted to inform their homeowners in June, he criticized. Because of the short timeframe, preparation is essential.
Because there are a few stumbling blocks: standard land values may have to be researched by independent expert committees. When it comes to the year of construction, core renovations may have to be taken into account, which could extend the remaining useful life of a house. In the case of living space, extensions and conversions must be measured by yourself if necessary. The cut-off date for all information is January 1, 2022; anything that has been changed after that does not have to be taken into account.
The tax offices determine the so-called property tax value from the submitted data. However, this is only one component in the calculation of property tax. The owners will probably not find out how much is due in the end until 2025, because the municipalities can adjust their assessment rates. These factors ultimately determine how much you have to pay in which municipality. Although the municipalities are required to keep their income at roughly the same level as before, they are not obliged to do so.