Real estate tax; determination of the assessed value and the assessed amount of real estate tax by the tax office

The municipalities levy property tax on property owners to finance their tasks. The responsible tax office determines the assessed value and the property tax assessment amount.

Description

The following are subject to real estate tax

  • agriculture and forestry (real estate tax A) and on the other hand, other real estate
  • other land, including land used for business purposes (land tax B).

The basis for the tax calculation is solely the value of the farm or the land. However, the value ratios as of January 1, 1964 are decisive. The personal circumstances of the property owner are not taken into account.

The tax is determined in a three-stage procedure:

  1. First, the tax office in whose district the agricultural and forestry business or the real estate is located determines the assessed value.

    In the case of an agricultural and forestry business, the capitalized earnings value is used as the basis for the business part, which is determined in a comparative procedure. The value of the residential part is derived from a multiple of the annual rent customary in the locality for the property, which is to be corrected by additions and deductions if necessary.

    In the case of other real estate, undeveloped land is assessed at its market value as of January 1, 1964. Developed land is generally valued using the income capitalization approach. Under this method, the value of the land is determined on the basis of a multiple of the achievable annual rent. If the building or part of it is owner-occupied, the rent customary in the locality is used as a basis. Here, too, additions and deductions may be necessary.
  2. In a second step, the tax office then determines the property tax assessment amount. This is calculated by applying the tax rate specified in the Property Tax Act to the assessed value.
  3. The responsible municipality then finally determines the property tax. In doing so, the property tax assessment amount communicated by the tax office is multiplied by the assessment rate that the municipality has set in advance in its bylaws. The municipality has wide discretion in determining the assessment rate.

The property tax can be waived, among other things, if the normal yield of the business or the property is significantly reduced and the owner is not responsible for this. The application for a waiver must be submitted to the municipality.

If the property is rented out, the property tax can be apportioned to the tenant as part of the operating costs.

Special notes

Real estate tax reform

In its ruling of April 10, 2018, the Federal Constitutional Court declared the standard values to be incompatible with the German Basic Law. The Bundestag and Bundesrat therefore passed a reform of valuation law in the fall of 2019. The new values will form the basis for property tax assessments from January 1, 2025. Until then, property tax will continue to be calculated on the basis of the standard values. With effect from January 1, 2025, the federal states will be able to enact independent state legislation that deviates from federal law. The Bavarian Property Tax Act was enacted on December 10, 2021.

Information on the property tax reform in Bavaria is available on the website of the Bavarian State Tax Office and the Bavarian Property Tax Information Hotline at 089 / 30 70 00 77.

Remedy

A separate notice is issued for the assessed value, the land tax assessment amount and the land tax, each of which can be appealed separately. However, an appeal against the real property tax assessment cannot be based on the fact that the real property tax assessment or the assessment of the assessed value is incorrect. Both notices are basic notices for the property tax assessment and are binding for the municipality. If the notice of assessment of the assessed value and/or the notice of assessment of the real property tax is amended, the municipality adjusts the real property tax ex officio. An appeal against the land tax assessment notice cannot be based on the incorrectness of the standard value.

Links to more information

Status: 25.06.2022

Responsible for editing: Bayerisches Staatsministerium der Finanzen und für Heimat

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