Real estate tax reform: implementation of the reform

This year, all property owners must submit a declaration of assessment so that the tax office can calculate the assessment basis for the new property tax.

The federal and state governments complied with the request of the Federal Constitutional Court in 2019 and initiated a comprehensive reform of the real estate tax. Because they were unable to agree on a uniform federal model, an amendment to the Basic Law gave the federal states the option of setting their own rules for the assessment basis of the property tax. Baden-Württemberg, Bavaria, Hamburg, Hesse and Lower Saxony have made use of this option. Saxony and Saarland have adopted the federal model but have set different tax assessment rates.

Irrespective of the regulation in the respective federal state, local authorities are to levy property tax for the first time under the new rules in 2025. The long lead time is necessary because the tax offices need time to compile all the necessary data for the roughly 35 million properties in Germany.

Across Germany, January 1, 2022 is the cut-off date for the revaluation. Both the value and the ownership conditions on this cut-off date are used as the basis for determining the assessment basis. This means that you must submit a declaration of assessment even if you have sold or given away your property after the start of the year.

Anyone who does not want to have the assessment return prepared by a tax advisor can do so electronically via ELSTER from July 1, 2022. Existing ELSTER registrations can also be used for the assessment return. Otherwise, a timely initial registration is required. Submission in paper form is only possible upon request in justified exceptional cases. The submission deadline is October 31, 2022.

Based on the information in the assessment declaration, the tax office then calculates the property tax value and property tax assessment amount and issues corresponding notices. The notices are then the basis for the assessment of the property tax by the city or municipality. This year's declaration is the first main assessment for the new property tax. Thereafter, there will be a new main assessment every seven years, for which a current assessment declaration must again be submitted.

To this end, all property owners will be asked to submit a property tax assessment return this year. The tax authorities published the relevant general notices in March, and in most federal states property owners will also receive an information letter by mail, which will be sent out in May or June.