The tax authorities face a huge challenge: Almost 36 million properties have to be revalued for a tax reform. For homeowners, that means work for the next few months.
This may come as a surprise to many homeowners: In the summer, they have to do a kind of second tax return. The reason is the reform of the property tax, for which the tax offices need information about the property, the house or the apartment.
But many citizens do not even know that they would have to submit this information in the summer, real estate associations and tax consultants criticize. Although some municipalities write to the homeowners directly, this is not mandatory. The fear: Many owners could find out about the property tax return too late – and gathering the necessary data can be really time-consuming.
Property tax important source of income
Property tax is one of the most important sources of income for municipalities. Before the Corona crisis, it covered around 15 percent of its tax revenue, which is then used to pay for roads, swimming pools or theaters. It is an annual tax on the ownership of land and buildings – but a landlord can also pass it on to the tenants via the utility bill. For most apartment owners, it is a few hundred euros a year, for owners of apartment buildings, on the other hand, it is often four-digit amounts.
The reform was decided more than two years ago after the Federal Constitutional Court called for a new regulation. Because the tax offices recently calculated the value of a property on the basis of completely outdated data – from 1935 in East Germany and from 1964 in West Germany. From 2025, the new property tax calculation is to apply. Before that, almost 36 million properties in Germany have to be revalued. According to the Ministry of Finance, the tax authorities are facing one of their largest projects in German post-war history.
Information about land and buildings
To do this, homeowners have to provide information about their properties and buildings in summer. Because the federal states use different calculation models, sometimes more, sometimes less information is required. Usually it is about the land and living space, the type of building, years of construction and the so-called standard land value. The President of the German Association of Tax Advisors, Torsten Lüth, expects a “huge data chaos”. He criticizes that the burden of obtaining information is shifted to taxpayers and tax advisors. “It can’t be that we go tediously looking for data while authorities are sitting on a number of data treasures.”
The Haus und Grund owners’ association also expects some difficulties for its members. For example, the standard land values must be requested from independent expert committees or researched on the Internet. The biggest sticking point could be the age of the building, says Sibylle Barent, the association’s tax expert. Core renovations, for example, would also have to be taken into account here, which could extend the remaining useful life of a house again. There are even stumbling blocks when it comes to living space: if necessary, extensions and conversions have to be measured by yourself. 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.
In general, homeowners should quickly begin to gather the necessary data from land registers and, in some cases, also from Internet portals, believes Barent. However, you cannot yet submit the property tax return: This must be done between July 1st and October 31st – and with a few exceptions only online via the Elster tax platform. If you don’t submit your application in time, there could be penalties for late payment.
Income tax assistance associations are not allowed to advise
Homeowners can get help from their tax advisors or owner representatives such as Haus und Grund. The income tax assistance associations, on the other hand, are not allowed to advise in this case. The Association of Tax Advisors sees itself facing a Herculean task. If all owners were to contact their tax advisors, each advisor could receive around 400 explanations, says Lüth. “This is madness.” In addition, there are different standards in the federal states. “That alone is hardly manageable alongside day-to-day business,” he says.
In addition, the work on the property tax return coincided directly with the Corona final invoices. The tax consultants are currently also applying for bridging aid for companies affected by the pandemic. “It will be a race against time,” predicts Lüth. The tax consultants therefore demand that data that is already available to the authorities is already pre-filled in a digital tax return. However, the authorities are still miles away from this.
The tax offices determine the so-called property tax value from the submitted data, which is only one component in the calculation of the property tax. The owners will only find out how much is due in the end and whether they have to pay more or less than before in 2025, because that depends crucially on the so-called assessment rates of the municipalities. In the approximately 11,000 German communities, these factors can range from 0 to more than 1,000 percent. Although the municipalities are encouraged to keep their income at roughly the same level, they are not obliged to do so.
Source: Stern
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
