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Property tax reform

The state is trying to invent an instrument at the expense of citizens, possibly, it seeks to program the regular increase in the property tax (Photo: hrohmann, pixabay.com).

Property tax reform was the subject of finance ministers conference in January 2019 and will probably even longer provide controversial debates. Federal and state governments have established key points that should be the basis for new legislation. This affects all German citizens – owners, landlords and tenants.
Various proposals on how the reform might look like are being discussed: an area-oriented as well as a profitable value-oriented model. In the latter, the net rental income, habitation, the year of construction and the land values are to be included. Critics of this model fear a bureaucratic monster. The process is so complex that both housing companies and tax authorities would be faced with intractable challenges.

The cornerstones plan mitigates some of the previous proposals. Unlike the original approach of the Federal Minister of Finance, for example regional average rents that are present in the statistical offices should not individual assessments carried out for each real estate object, but package information is used. Plots are divided by land values ​​in zones and built before 1948 building to be assessed uniformly. Individual assessments should there when the actual net rent is up to 30 percent below the local average rent. This compromise is considered intermediate result. The finance ministers of the countries have converged, but are far from unanimous.

The reform has become necessary because the Federal Constitutional Court had declared the system of property tax last year was unconstitutional. No later than 31 December 2019, it must be reformed. If they succeed, may the rules currently in force for another five years, but no longer than until 31 December 2024 be applied.