Why is the tax levied?
Property tax is introduced to allow landowners to contribute to the cost of infrastructure spending. In 2022, local authorities' revenue from this tax amounted to 14.9 billion euros.
Until now, property tax has been calculated on the basis of standard values. In some federal states, the appraisals for property values date back to 1935. Since then, values have changed considerably, especially in metropolitan areas where the value of land has increased significantly.
The previous calculation method meant that properties of equal value were sometimes valued differently in terms of the tax burden. The Federal Constitutional Court declared this unconstitutional, which is why a reform was necessary. This reform will come into force on January 1, 2025. Last year, owners were therefore obliged to provide the tax office with information about their property. This information included:
- Type of property (e.g. single-family home)
- Plot area
- Residential or usable area
- Guideline land values
- Year of construction
Who has to submit the declaration again in 2024?
In 2024, property owners who were required to submit their property tax return again last year will be obliged to do so. In Bavaria, the deadline for submission has been extended to March 31. However, the property tax return is not a one-off matter. A new assessment takes place every seven years. This year, however, the first owners will have to submit a follow-up declaration if there have been changes to the property, house or apartment.
A subsequent declaration for property tax is required if there have been changes to the property since January 31, 2023. Examples of this ared:
- Extension of basement or attic
- Changes in the use of the area, for example the conversion of commercial space into residential space
- Development of previously unused land
- Division of the property
Not all of these cases are relevant for property tax, however, as the current property tax models only require a declaration if the change in value is 15.000 euros. However, it should be noted that this regulation does not exist in Bavaria, Hamburg, Hesse and Lower Saxony, and the effects of the changes vary depending on the federal state. It is best for property owners to ask their local tax office when a declaration is required.
The property tax declaration must be submitted electronically to the tax office, just like last year. The online program 'My Elster' can be used for this and the necessary form is available on the portal. An alternative option is to submit the subsequent return via a tax advisor.
Property tax is calculated by taking three variables into account: the value of the property, the tax base and the assessment rate. The resulting tax burden varies from municipality to municipality, as the cities set the assessment rate themselves.
The deadline for the 2024 property tax return ends in most federal states on January 31, 2024, without a separate request. In Bavaria, Hamburg and Lower Saxony, citizens have until March 31, 2024. Failure to meet the deadline could result in a late payment surcharge, a fine and, in the worst case, an accusation of tax evasion.
In principle, there is the option of extending the deadline, which should be requested in writing. An informal letter to the relevant authority is sufficient, but the granting of the extension is not mandatory.
Source: Wirtschaftswoche
