German tax platform Elster buckles as property owners submit declarations

The German online tax platform Elster has broken down due to a flood of users having to submit a property tax declaration under new rules.

Homes in Nierstein, Rhineland-Palatinate.
Homes in Nierstein, Rhineland-Palatinate. Property owners have to submit a tax declaration. Photo: picture alliance/dpa | Silas Stein

Since July 1st, people who own property in Germany have had to submit a new declaration to the tax office on their property’s value.

However, the Elster website, which allows people in Germany to file their tax returns electronically, is unable to cope with the rush.

“Due to enormous interest in the forms for the property tax reform, there are currently restrictions in availability,” a notice on the Elster site said on Sunday evening and Monday. “We are already working hard to provide you with the usual quality as soon as possible.”

The Elster app is also experiencing technical difficulties. 

The technical problems affect other people in Germany who use Elster to submit their general tax declaration. The platform – which stands for ELektronische STeuerERklärung – was developed by the Finanzamt to make the process simpler.

Why do property owners have to submit tax declarations?

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as Grundsteuer) unconstitutional, partly because the property values currently used to calculate what an owner owes are out of date.

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.

So now owners are being asked to send in new declarations, based on values as of January 1st 2022.

READ ALSO: Explained – The German property tax declaration owners need to know about

Property owners have been given from July 1st until the end of October 2022 to submit a tax return with data such as the plot number, year of construction, living space and standard land value.

Depending on the federal state, different information may be required because the states have differing calculation models.

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 at the moment.

Flat owners may have to pay hundreds of extra euros a year, while owners of larger apartment buildings, could face a four-digit sum.

Property owners will probably not know how much they will ultimately have to pay until 2025, because the property tax value calculated from their data is only one component in the calculation of property tax – and the municipalities can adjust their assessment rates and thus determine how much they will have to pay.

The site has been set up to help provide information to owners. 

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Why Germany’s property boom could be coming to an end

For the first time in over a decade, property sales in Germany appear to be falling, fuelling speculation that the country's soaring real estate market could be experiencing a reversal in fortunes.

Why Germany's property boom could be coming to an end

For more than a decade, the property market in Germany has been growing at a dizzying pace. But according to a new report by the Hamburg-based Gewos Institute for Urban, Regional and Housing Research, this period of rapid growth could be coming to an end.

In 2022, sales of flats, houses, commercial property and land are likely to fall by seven percent €313.5 billion and the number of purchases is expected to drop below 900,000.

For its study, Gewos analysed data on finalised property purchase contracts and the associated turnover. 

Based on the data for the first half of the year, a decline in turnover in the German real estate market is expected this year “for the first time since 2009”.

READ ALSO: Why house prices in Munich are starting to fall

Since May, the number of purchases, sales and especially large transactions have been falling compared to the same period in 2021, explained Sebastian Wunsch, Head of Real Estate Economic Analyses at Gewos.

Last year, turnover in real estate reached a record value of €337 billion, representing an increase of 14.5 per cent compared to the previous year and more than double that of ten years ago.

While the number of purchases fell slightly due to a lack of supply, prices for houses and flats shot up by around 13 percent. These were the strongest increases since records began in the 1980s.

According to Wunsch, this “absolutely exceptional year” was partly down to a rebound in the housing market in the aftermath of the Covid crisis and a huge boom in transactions in Germany’s largest cities. 

But conditions on the housing market are making it increasingly difficult for both private buyers and investors to conclude property purchases, he said.

For people looking to buy their own home, the combination of high inflation and rising interest rates means that purchasing power is reduced at a time when mortgages are getting pricier.

Investors, on the other hand, are holding off on purchases due to the uncertainty in the market. This has led to a slowdown in real estate transactions. 

‘No drop in house prices’

Despite the decline in purchases, Gewos doesn’t believe that house prices are set to drop just yet.

According to the report, the pressure on the German housing market remains high due to strong levels of immigration and the slow pace of construction. 

“There is no sign of an across-the-board price decline, let alone a sudden drop in prices,” said Wunsch.

However, Gewos does expect residential property prices to grow at a slower rate, with increases of around three percent this year.

“Regionally and in certain locations and submarkets – such as for unrenovated existing properties – price declines cannot be ruled out either,” Wunsch added. 

According to Gewos, the residential property market, which accounts for almost 80 per cent of transactions in this country, is also likely to fare somewhat better than the property market in general.

In 2022, turnover in flats and houses will probably fall by around 5.6 percent to just under €240 billion.

READ ALSO: The rules foreigners need to know when buying property in Germany