Property tax 2022 – need for action for property owners!

Further update 31/01/2023: In Bavaria, the deadline for submitting property tax returns is extended to the end of April.

In the Free State of Bavaria, property and land owners now have a further three months to submit their property tax returns. This was decided at short notice in the cabinet on 31.1.2023. With this deadline extension, the Free State wants to “give relief once again” – especially for the tax consulting professions. The new submission deadline ends on April 30, 2023.

Update 10/13/2022: Instead of at the end of October, they now have to submit the property tax return by the end of January 2023. This was decided by the finance ministers of the federal states.

What is the background to the new property tax? Well, the old familiar standard value as the assessment basis for the property tax paid by every land and property owner in Germany has had its day. It was ruled unconstitutional by the Federal Constitutional Court in 2018.

The legislature has now passed a new Property Tax Act, which contains the regulations on revaluation.

For this purpose, all land and property owners must file a tax return.

Read what to do, which deadlines apply and which questions need to be clarified.

Property tax reform – what to do in 2022

How will the new property tax be determined?

In future, the property tax value will form the basis of assessment. For this purpose, all land will be revalued as of 01.01.2022. The newly determined property tax will then be due for the first time from 01.01.2025. The property tax itself will be set by the respective municipalities.

Who is affected and what to do?

For the revaluation of land, all land and property owners in Germany must electronically submit a declaration of assessment to the tax authorities for each real estate unit or plot of land. This applies to both private individuals and companies.

What deadlines apply?

It is expected that from the end of March 2022 a request for the submission of corresponding declarations of assessment will be made by public announcement of the tax administration. In addition, some Länder tax administrations are planning to send separate information letters to every person liable for property tax.

As things stand, the assessment return must be sent in the period from 01.07.2022 to 31.10.2022.

On October 13, the finance ministers of the federal states decided that the property tax return must now be submitted only by the end of January 2023.

How is the revaluation carried out according to the federal model?

Revaluation is done according to the use of the land. Residential properties are valued according to the income capitalisation approach, business properties or mixed-use properties according to the simplified tangible asset value approach.

This value-based method takes into account individual property factors such as rent and land prices to determine the market value.

Important to know: Federal states can deviate from this regulation at the federal level! Some federal states have made use of this. These include Baden-Württemberg, Bavaria, Hamburg, Hesse and Lower Saxony.

What applies in Bavaria?

Bavaria will follow an area model, i.e. a value-independent model. The value determination thereby deviates fundamentally from the Land Tax Act. It is based on the area of the land and building as well as the living space and property use. Age of the property and its value do not play a role.

What documents do I need to submit and where?

What documents and evidence you need to submit varies depending on the state and the assessment procedure used.

• Basically, the tax administration requires general land register data, information on the property use (residential/commercial)) and the standard ground value.
• Depending on the federal state or model, further information is required, e.g. the property type, year of construction, gross floor area as well as the usable or living area of the building.

Especially if you own real estate or land in several federal states, this can quickly become confusing.

The corresponding declaration must be submitted online by the owner via the tax portal ELSTER.