Financial expert warns: Property tax reform puts more strain on residential properties than expected

Financial expert warns: Property tax reform puts more strain on residential properties than expected

According to a report from www.welt.de, the property tax reform in North Rhine-Westphalia is imminent in the municipalities this year. Initial calculations indicate that there could be a shift at the expense of residential properties. Local associations warn of a possible shift in burdens and are demanding corrections from the state government. The municipalities have options for shaping property tax and trade tax by setting the assessment rates within the framework of their self-administration. The new property tax notices are expected to be sent out in the second half of 2024.

The property tax reform could have a massive impact on the real estate market in North Rhine-Westphalia. If the local associations' fears that residential properties could be more heavily burdened than commercial properties come true, this could lead to a distortion in the real estate market. Residential properties could become less attractive, while commercial properties are preferred.

In addition, tenants and apartment owners could also be affected by a higher property tax burden. This would have financial implications for private households and could influence rental prices. A possible correction by the state of North Rhine-Westphalia could help prevent tax disadvantages for residential properties and thus mitigate the effects on the real estate market.

The calculations in the municipalities are already underway and the decisions on the assessment rates are still pending. This opens up the opportunity for municipalities to actively shape the financial impact for their citizens. Ultimately, the exact effects of the property tax reform on the market and the financial sector depend on the decisions of the municipalities and the state of North Rhine-Westphalia. It remains to be seen how the situation will develop and what measures will be taken to minimize possible negative effects.