The basic tax levy charges owners and tenants

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Buying home ownership is a costly business. Finally, purchase costs, loan interest, notary fees. Although these items may be paid gradually, but a property follows the owner, as long as he owns the property: the property tax.

The Grunsdersats is set by each municipality individually and results in multiplication of the Grunsdersats the property tax paid by the property owner. In the municipalities, the increase in the Grunsdersatses is a popular means to fill their chronically damp cash. The range of land tax rates for German municipalities ranges from zero to 910 percent, as our comments on this page will show.

Calculation of the property tax

Calculation of the property tax

The property tax is levied by the respective municipality and distinguishes between

  • Agricultural and forestry assets (property tax A) as well as
  • built and buildable land (property tax B).

The property tax is calculated from three factors:

  1. The unit value of the property. This is determined by the responsible tax office. Decisive for the determination are the land, the income that can be earned on the same as well as the assets that are on the property. However, the official discovery process is profoundly intricate and intransparent, which has often been part of legal proceedings.
  2. The control measurement. This depends on the type of property and is multiplied by the unit value in order to determine the basic tax rate. For example, the figure for Germany for agricultural and forestry assets is 6 per thousand, and for all other properties – depending on the type of land and location – between 2.6 and 10 per thousand. In the new federal states, the tax rates are higher than in the old federal states.
  3. The lifting set. While the tax measure is regulated by law, the basic tax rate is determined by the municipalities and is multiplied by the tax assessment amount to determine the property tax.

Sample calculation: You buy a condominium. The tax office sets the unit value of the apartment to 250,000 USD. The Stramesszals for such a property is 3.5 per thousand, the Grunsdersats is therefore 875 USD and the nationwide.

How much property tax you will ultimately pay per year now depends on which city or municipality you buy the property. In Berlin, the basic tax levy is 810 percent, ie, there are nearly 7,100 USD land tax due. With 535 percent applies in Munich, a much lower levy rate, here would be for the 250,000 euro apartment only just under 4,700 USD land tax annually due.

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The location makes the price

The location makes the price

The calculation example makes it clear that the property tax rate plays the decisive role in the amount of property tax. It can be some rules of thumb determine, such as that the rate of levy in the cities is usually higher than in the countryside. However, the fact that the more than 11,000 German municipalities have the right to determine their own rate of levy ensures some curious events – eg. B. that the owner in a few kilometers away neighboring town already has to pay 5000 USD more property tax for his house.

The average rate of assessment of more than 11,000 communities in Germany is 365 percent. Front runner is currently the North Rhine-Westphalian town of Witten with a Grunsdersats of 910 percent. Some communities, however, renounce the levy rate, such as Riegenroth in Rhineland-Palatinate or Südermarsch in Schleswig-Holstein.

Higher rates of levy against the budget deficit

The German cities are all over the German mean, living in the city is therefore not only thanks to rising rents and purchase prices an expensive pleasure. The residents in Duisburg (855 per cent) and Berlin (810 per cent) are hit particularly hard, while the rates of levy are much lower in Düsseldorf (440 per cent) and Wolfsburg (450 per cent).

Current property tax rates

Current property tax rates

This shows another trend: economically strong and healthy cities can afford to set lower property tax rates, while indebted cities and towns are trying to improve tax revenues through higher collection rates. After all, property tax is one of the few sources of money that flows directly into the coffers of municipalities.

This becomes especially clear in the Ruhr area, where many cities suffer from high debts and try to compensate them with higher municipal taxes. Not only in Duisburg, but also for example in Haltern am See, Selm (825 per cent each) and Hattingen (876 per cent). However, this increases the danger that cities will become increasingly unattractive to potential residents due to the high rates of levy.

In the past few years, land tax increases in Germany have continued to increase. In the North Rhine-Westphalian town of Witten, the tax rate was 470 percent in 2012, compared to 590 percent in 2013. At the end of 2015, politicians discussed an increase in the tax rate decided only a few months earlier from 690 percent to 910 percent.

Bad cards for owners

Bad cards for owners

Owners are largely powerless against these rate increases. Several courts have denied complaints by homeowners against raising the basic tax rate, which is covered by the constitutionally guaranteed tax sovereignty of the municipalities, as long as it does not lead to a disproportionate tax burden on citizens or is arbitrary.

Where exactly the limits are disproportionate and arbitrary remains, of course, open. The city of Freudenberg in the Siegerland obviously had exceeded the limit when it wanted to raise the tax rate from 440 percent to 916 percent in 2014. According to harsh criticism, the community contented itself with 650 percent – which shows that owners do not have to put up with anything.

Ten kilometers decide on thousands of USD

That it can sometimes be only ten kilometers, whether they have to pay three times the land tax, however, already. As far as the Rhineland-Palatinate communities Dierfeld and Diefenbach apart. Significantly further apart are the respective Grundsteuerhebesätze. While in Dierfeld with 900 percent the second highest levy rate accrues in Germany, the rate is a stone’s throw away in Diefenbach at just 290 percent.

At that ten-kilometer difference is whether the owner of a single-family home, whose unit value was set at 250,000 USD, must pay 7,564 USD (Dierfeld) or 2,437 (Diefenbach) land tax a year. In the countryside it is therefore worthwhile to pay close attention to the boundaries of the communities and to compare the respective rates.

According to the law, a municipality does not have to ask for a property tax, but no municipality in Germany would like to do without it altogether. The Palatinate Ingelheim on the Rhine (by the way, only just under 100 kilometers from Hebesatz leader Dierfeld away) requires of its landowners only 80 percent.

If you want to completely avoid the property tax, there are only a few options left. On the one hand, the owner can rent his property and transfer the property tax to the tenants, if it is agreed in the lease. Certainly a little anti-social, but legally permissible.

The other possibilities are to be regarded with a wink and more of a theoretical nature. However, there is the possibility to accommodate on its ground floor an airport, a dam or a cemetery and thus be exempt from property tax.

The property tax is a related evil when buying a property that tracks the owner until the sale. Especially the rates of levy, which the cities and communities have diligently pushed up in the past years, are increasingly becoming a nuisance.

As the property tax can be passed on to the tenants, owners and tenants alike are annoyed by skyrocketing rates. Consumer advocates and tenants associations therefore already demand an upper limit similar to the rental price brake, by what percentage the rate of levy may be increased annually. As long as the communities are allowed (almost) free to decide what they think appropriate.

The fact that the more than 11,000 municipalities are all allowed to determine the decision-making power over their own tax base does not only lead to glaring differences within the Federal Republic (the highest tax rate is twenty times higher than the lowest), but also to curious scenarios – such as that in the Neighboring village 5,000 USD Land tax annually save. Owners should always keep an eye on current developments.


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