A new way to pay real estate taxes in Germany

“The morning sun never lasts a day” - this proverb is very similar to German real estate market that waits for significant changes in tax system in some 5 years from now. According to the decision of the Federal Council, property tax will be paid in a new way, starting form 2025. The amount of the new tax is yet to be determined. Currently, it can be said, that the tax rate will be variable. The rate will be determined by the geographical location of the property, as the final decision taxes rates will be made a privilege of local authorities of federal states. Moreover, they can always refer to the calculations prepared by the central governing bodies.

Another key part of the story is that, all exploited real estate in Germany will be revalued. In parallel, the German government will control the process of regulating tax rates by municipalities. It is expected to take place without let or hindrance.

So far, the taxation of German real estate is as follows. The buyer of a house or apartment is required to pay tax on the acquisition of real estate that may vary from region to region. For example, in Berlin, it is not more than 6%. The tax rate is completely dependent on the legislation of one or another federal state.

How German real estate will react to such an innovation? There is no clear-cut answer for this question either. The tax system plays a significant part in regional budgets replenishment. All we know today is that Germany has proved to be one of the permanent leaders in the European and world real estate markets and probably will continue the streak.