Real Estate Tax Reform: The Most Important Questions and Answers

For months has been discussed, struggling to change and threatened. But now Union and SPD seem to agree with the opposition parties Greens and FDP. The Grand Coalition relies on their votes if the Bundestag decides on the renewal of the land tax this Friday.


However, the reactions to the planned reform are critical. Kai Warnecke, president of the owners' association Haus & Grund, described the model of finance minister Olaf Scholz (SPD) to the SPIEGEL as "not at all convincing". It leads to an "extreme administrative effort" and to "extreme distortions". The German Tenants Association also spoke of a "complicated" reform. Whether it really comes to no additional burden for the citizen, the association remains unclear, said a spokesman.


What is it all about? Why is property tax so important to tenants and landlords? And what happens if the reform proposal of the Federal Minister of Finance still fails? The most important questions and answers at a glance.


What is the property tax?


The property tax is a tax that is levied on the land. This means that anyone who owns a property or a building pays taxes for it. However, owners can impose the property tax as operating costs – ie on the additional costs – to the tenants. It is raised once a year and flows entirely to the cities and towns. In the year 2018 around 14.2 billion euros were taken, the land tax is thus an enormously important source of money for the municipalities.


Why must property tax be re-regulated?


The new regulation is based on a judgment of the Federal Constitutional Court from April 2018. The court classified the previous calculation of the property tax as unconstitutional. The basis for the calculation, ie the property values ​​(also called unit values), is completely outdated and unfair. The Constitutional Court gave finance minister Olaf Scholz (SPD) time until the end of this year to create a new basis.


How is the property tax calculated so far?


Three steps are needed to calculate the amount of the property tax: First, the value of a building or land is determined – with the help of the (obsolete) unit values. The basic tax value is then multiplied by the so-called control meter, whose value is very low. The decisive factor is the third step, the multiplication by the lifting rate. This is set by each municipality itself and can be several hundred percent.



How should property tax be calculated in the future?


Also in the future, the property tax should be calculated in the known three steps. In order to calculate the basis, ie the property value, but now different factors are used. Important are the value of the land (land value) and a statistically calculated net rent. The area of ​​the property, the type of property and its age should also play a role. The Steuermesszahl should be reduced to compensate for value increases. The rates should be adjusted by the municipalities, if necessary, in order to avoid a higher taxpayer burden.


However, there is another possibility: The planned reform provides for so-called opening clauses. Thus, the countries have their own design options and could decide against a value-based model. Instead, they could choose a value-independent variant that only takes into account the area of ​​land and living space.


What consequences does the reform have on tenants and owners?


The consequences are so far hardly foreseeable, because ultimately it depends on whether the states develop their own rules and how each individual community reacts to the changes. And even if the real estate tax reform in the Bundestag is decided, first everything stays as it is. The Federal Constitutional Court has provided for a transitional period of five years, until 31 December 2024. As long as may be expected as before. The consequences will only be felt from 2025.


What would happen if the reform in the Bundestag fails?


Because for the reform also the basic law must be changed, it needs a two-thirds majority in the Bundestag. The Federal Government, consisting of the Union and the SPD, therefore needs the votes of the Greens and the FDP. Although these still made demands and criticized, they finally signaled their approval.


If no two-thirds majority in the Bundestag come about, after which it does not currently look, that would have serious consequences. Because then every federal state would have to find a rule – until the end of the year. If that does not work, the municipalities could lose a lot of money.



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The opinion research institute Civey works with a multi-level fully automated procedure. All representative real-time surveys are in a Germany-wide
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Opinion polls are usually conducted by phone or online. The significance of the results depends on how many people can be reached and how many actually participate in a survey when they are approached. Internet connections and landline connections are currently about equally widespread in Germany – with about 90 percent of households, mobile phones even 95 percent. The willingness to participate in all methods is in the single-digit percentage range, experts estimate it particularly low for telephone surveys.
So there is a group of people in both methods, which can not be reached, either because they have no connection to the respective network or not want to participate in the survey. Therefore, a significant number of people must always be approached for a meaningful result. Civey surveys are currently in addition to SPIEGEL ONLINE in more than 20,000 other websites involved, including various media. This ensures that as many populations as possible can be reached.

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In our graphs, the statistical error is shown as a colored interval. This interval shows the uncertainty associated with a poll score. For example, on the Sunday question, one can not say exactly how many percent a party would get in a poll, but specify an interval where the outcome is likely to be. If the intervals of two survey values ​​overlap, then strictly speaking no statements about the difference can be made. For the Sunday question this means: If the poll numbers of two parties are so close together that their error intervals overlap, it can not be deduced from which of the two would currently perform better in the election.

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Who is behind Civey polls?

At this point, readers in the app and on the mobile / stationary website have the opportunity to participate in a representative Civey survey. Civey is an online opinion research institute based in Berlin. To compile its representative surveys, the software of the company, founded in 2015, merges websites into a nationwide survey network. In addition to SPIEGEL ONLINE include, among other things, the "Tagesspiegel", "World", "Wirtschaftswoche" and "Rheinische Post". Civey was funded by the ProFit funding program of Investitionsbank Berlin and the European Regional Development Fund.

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