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Real estate tax – Subsequent determination of assessed value and updating the value

Real estate owners had until 31.1.2023 to submit a real estate tax return as at the date of the main assessment of 1.2.2022. The reassessed real estate tax will have to be paid from 1.1.2025. In order for the assessed values to be adjusted on an ongoing basis, a main assessment is generally planned for every seven years. However, in the event that changes are made with respect to the real estate, it is possible that a subsequent determination of assessed value or an update of value could be mandatory already earlier.

Range of models and constitutionality

Ever since the announcement of the real estate tax reform, which was implemented in many German federal states using different models, doubts have been expressed about the constitutionality of the calculation models. In the meantime, these doubts have also been brought in complaints before various tax courts, thus, for example, before the Baden-Wuerttemberg tax court with respect to the so-called land value model, under the case reference: 8 K 2368/22 and 8 K 2491/22, or in relation to the federal model before the Rhineland-Palatinate tax court, under the case reference: 4 V 1295/23 and 4 V 1429/23. 

Since, at this juncture, principal proceedings are not yet known to be pending before a supreme federal court and, notably, not before the Federal Constitutional Court, it is therefore entirely possible that, as of 2025, the ‘new’ real estate tax will be calculated on the basis of the real estate tax returns that have been submitted. 

Despite the persisting uncertainty concerning constitutionality, a real estate tax return has to be submitted for changes that have occurred, under the conditions specified below in sections 2 and 3, by 31.1 of the subsequent year without being requested to do so by the local tax office. In Bavaria, Hamburg and Lower Saxony the relevant cut-off date for submissions is 31.3.

Subsequent determination of assessed value

Insofar as an economic unit is newly developed, or an economic unit that already existed is taxed for the first time, a subsequent determination of assessed value would have to be submitted, for example, in the following cases:

  • completion of construction projects and thereby a change from undeveloped real esate to developed real estate,
  • the dividing up of a plot or the discontinuation of a tax exemption.

Updating the value

If, since the date of the last assessment, the value of the real estate or the agricultural and forestry enterprise has changed by more than €15,000 (rule in the federal model and in Baden-Wuerttemberg) then a real estate tax return with an updated value would have to be submitted. This could be the case if 

  • the area of a plot of land is extended or reduced, or
  • construction works have been completed.

Conclusion

Whether the real estate tax value is reassessed within the scope of a subsequent determination of assessed value, an updating of the value or a combination of both, ultimately, there will be no consequences for real estate owners. However, in all cases it would be true to say that if, in the period between two main assessments, changes occur that are relevant in terms of tax then these would have to be reported accordingly insofar as the local tax office had not already become aware of these.

Please note: The specific rules may vary depending on the German federal state or the model. So, for example, in Hesse, a main assessment is planned only once every 14 years while in Bavaria, Hamburg and Lower Saxony a main assessment at regular intervals is not envisaged.

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