Property tax increase in NRW: effects and measures explained for financial experts

Property tax increase in NRW: effects and measures explained for financial experts

According to a report by www.n-tv.de, it turned out that around 25% of the municipalities in North Rhine-Westphalia increased property taxes between July 2022 and June 2023. This not only affects property owners, but also tenants and businesses. The assessment rates for this tax were above the previous year's value in 104 municipalities, while the assessment rates remained unchanged in 287 municipalities. The assessment rates have even fallen in five municipalities. Property tax is an important source of income for municipalities and is used to finance schools, kindergartens, roads and other public facilities.

In view of the financial difficulties of local authorities and the increasing number of tasks that have to be carried out, cities and municipalities are forced to increase property taxes in order to present a balanced budget. The German Tenants' Association and the North Rhine-Westphalia Taxpayers' Association warn that the increase in property tax will have a negative impact on tenants and businesses. The tenants' association is calling for property tax to be removed from the catalog of allocable additional costs, as it is usually passed on 100% to the tenants.

The upcoming fundamental property tax reform from 2025 could also play a role in the coming increases. It is expected that many municipalities will also increase property taxes this year. The evaluation by the State Statistical Office concerns the municipalities' assessment rates for property tax B, whereby agricultural and forestry areas are not taken into account.

As a financial expert, I see the property tax increase as a reaction to the financial challenges that many municipalities in North Rhine-Westphalia are currently having to overcome. These measures could result in tenants having to pay higher utility costs, which in turn affects their financial situation. Traders will also be affected by direct or indirect impacts. The planned property tax reform in 2025 could bring further changes in the market and the financial sector. It is therefore important to continue to closely monitor developments in this area and analyze possible impacts.