August 10, 2023, 3:23 pm | Read time: 4 minutes
The property tax generally affects anyone who owns land or real estate. It is a municipal tax levied by cities and towns and significantly contributes to the financing of public tasks. But what exactly is behind the property tax, and how can one understand the property tax assessment notice?
Once a year, property owners receive mail. They are sent the property tax assessment notice. Those who acquire a new property receive the property tax assessment notice from the relevant tax office, but not immediately after the purchase is completed; it arrives on January 1 of the following year. But what does this property tax assessment notice actually mean? Christopher Hnida is a real estate agent and explains the most important technical terms. The upcoming changes from 2025 are initially disregarded here.
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An Overview of Property Tax
Property tax was first introduced in 1924 and has undergone numerous reforms since then. It is based on the Property Tax Act and is calculated according to the value of land and real estate. There are two types of property tax:
- Property Tax A: This is levied on agricultural and forestry land.
- Property Tax B: This applies to all developed or developable land, such as residential buildings, commercial properties, and undeveloped building plots.
The amount of property tax is determined individually by each municipality and depends on factors such as the size of the property, the standard land value, the type of building, and the assessed value. Property tax is an annual tax and is usually paid quarterly.
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Explaining the Property Tax Assessment Notice
The property tax assessment notice is an official document sent to property owners. It contains important information about the calculated property tax and the payment terms. To properly understand the notice, it is advisable to familiarize oneself with the following points:
- Tax Number and Jurisdiction: At the beginning of the notice, the tax number and the responsible tax authority are listed. It is important to check the accuracy of this information to avoid possible misunderstandings.
- Property Description: This section provides a detailed description of the property and the buildings on it. Information about the location, size, and type of the property is provided.
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- Assessed Value: The assessed value currently forms the basis for calculating property tax. It is determined by the tax office and reflects the value of the property, which corresponds to the year 1964 in the old federal states. For the new federal states, the assessed value is calculated based on the value from 1935.
- Assessment Notice: The assessment notice contains the calculation basis for the property tax. It includes information such as the tax assessment amount, the municipal multiplier, and the type of tax (A or B).
- Property Tax Assessment Rate: The property tax assessment rate is a percentage applied to the assessed value to determine the tax assessment amount. It varies depending on the type of property and is also specified in the notice.
- Multiplier: The multiplier is another factor applied to the tax assessment amount to calculate the actual property tax. Since it varies from municipality to municipality, the amount of property tax can differ within Germany. The respective tax office sets it.
- Due Date and Payment: The final section of the notice specifies the due date for the property tax and the preferred payment method. Payment is usually due quarterly.
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It is important to carefully review the property tax assessment notice. If there are any uncertainties or apparent errors, it is advisable to promptly contact the local tax office and file an objection to the notice.
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