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EXPLAINED: The German property tax declaration owners need to know about

Property owners in Germany will have to send the tax office an updated declaration of their property values this year, to help calculate a new amount they’ll have to pay in tax. We explain what they’ll have to do.

EXPLAINED: The German property tax declaration owners need to know about
Property taxes are increasing. Photo by PATRICK HERTZOG / AFP

People owning property in Germany, from individuals who might own their home to commercial landlords, may have recently come across advisories from tax consultants or media stories, telling them they’ll have to submit a new declaration to the tax office as to their property’s value.

Interactions with German bureaucracy – especially the tax office – can be intimidating, but there’s a few easy steps to follow if you have to declare.

Who has to declare, when – and why?

In 2018, Germany’s highest court declared the country’s current laws on property tax (known as Grundsteuer) unconstitutional, partly because the property values currently used to calculate what an owner owes are seriously out of date.

West German properties were last assessed for tax purposes in 1964, and East German ones in 1935.

The constitutional court gave the government until the end of 2019 to come up with a new way of calculating the tax for Germany’s 36 million properties.

That’s why owners are being asked to send in new declarations, based on values as of January 1st 2022.

The tax office will then use those declarations to determine what new tax rates owners will have to pay for their properties. Although they may end up having to bear some of costs of higher property tax later, tenants don’t have to declare anything – just owners.

Owners have between July 1st and October 31st of this year to send in updated information electronically to the tax office.

READ ALSO: Update: What you need to know about the German property tax reform that affects us all

What information do I need?

Each of Germany’s 16 federal states are allowed to have slightly different regulations in the property tax reform, so be sure to check what specific regulation governs you. That said, a few key documents will help you to provide an updated property value to submit.

Extract from the land register (Grundbuchauszug): For people who purchased their property prior to January 1st 2022, this may be the best option to get the most up to date valuation possible that the tax office will accept. The federal government’s dedicated website on the updated property tax declaration also strongly recommends you have this document in particular. You can get this record by making an appointment with your land registry office, or Grundbuchamt. Each individual district, or Bezirk, will have one. You often have to make appointments with them beforehand to request documents, so call them up or email them to request a time.

Last assessment notice (Einheitswertbescheid), purchase contract, or construction documents: A few other documents, particularly for more recent purchases, will help you fill in the declaration. Construction documents may have been included with your purchase contract, and your local tax office will have sent you an assessment notice after you took possession of your property.

These documents will help you answer a few key questions on the electronic declaration, including what year the property was built, its size, number of parking spaces or renovation year. All of these will end up being relevant for the final declaration.

When will the new rate come into effect?

Tax experts say it may take until late 2024 for the new rates to be calculated. The federal government will decide on a base before each individual state may adjust their rate slightly through state law. That’s why it might take some time to tell owners what their new rates will be, with them expected to come into effect on 1 January 2025.

Until that date, owners can continue paying what they are currently paying with no changes.

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TAXES

Germany to extend (and increase) tax rebate for people working from home

Starting in 2023, people working from home will be able to deduct €1,000 per year for working from home, up from the previous annual amount of €600. Here's what you need to know.

Germany to extend (and increase) tax rebate for people working from home

This means that in future, 200 instead of 120 days devoted to ‘home office’ will be eligible for the €5 per day deduction, which was originally introduced amid the Covid pandemic in 2020 and was set to expire at the end of this year.

READ ALSO: Germany plans tax rebate for people working from home

The sum can be deducted regardless if a separate workspace is used or available – meaning it applies to employees working on their couches or kitchen tables.

“This especially relieves families with smaller flats, who don’t have the space available for an extra office,” according to a statement on the German government’s website.

Employees who do have a separate study, though, can furthermore claim €1,250 back on their taxes.

However, certain criteria must be met – for example, the room must be used exclusively for professional purposes and must be separable from the rest of the apartment.

All workers in Germany also receive a lump sum of income-related expenses, which can be deducted each year: that amount is going up by €200 in 2022, bringing the total to €1,200.

The higher working-from-home allowance is part of the Annual Tax Act 2022, which was discussed by the Bundestag Finance Committee on Wednesday, and is set to be approved on Friday.

In September, about a quarter of employees in Germany were ‘continuing to work from home’ after Covid-measures were relaxed, according to the Munich-based Ifo Institute.

READ ALSO: Who benefits most under Germany’s tax relief plans

More tax changes

The new tax law will also introduce an ‘excess profits tax’ (officially called the “EU energy crisis contribution”) for companies that make large profits from oil, natural gas, coal and refineries. 

People with larger incomes will also be required to pay the tax on the gas price cap, which is set to be paid out to residents early next year. 

Vocabulary

Deduct – abziehen

Workspace – (der) Arbeitsbereich/ (der) Arbeitraum

Lump sum – (die) Pauschale

Income-related expenses – (die) Werbungskosten

We’re aiming to help our readers improve their German by translating vocabulary from some of our news stories. Did you find this article useful? Let us know.

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