Property tax reform: Municipalities receive recommendations for new assessment rates

Property tax reform: Municipalities receive recommendations for new assessment rates

The new legal regulation of property tax, which will come into force next year, will bring changes for owners of developed and undeveloped land as well as agricultural and forestry businesses in the Hersfeld-Rotenburg district. The Hersfeld-Rotenburg tax office has already sent 94.2 percent of the necessary notifications about the new property tax assessment amounts for a total of 66,741 economic units in the district. This rate corresponds to the average in Hesse. This also includes properties for which the tax office had to estimate due to missing information. The submission deadline has been extended from the original October 31, 2022 to January 31, 2023 in order to give property owners more time to submit their information on year of construction, living space and standard land values.

The response rate for information across Hesse was over 98 percent at the turn of the month. A total of 9.9 percent of the decisions were contested with objections. There is no detailed statistical evaluation at district level regarding the level of the new measurement amounts compared to the previous calculation. The property tax reform should be revenue-neutral for municipalities, meaning that the total annual property tax revenue should neither increase nor decrease.

During the course of the year, the tax administration will send all cities and municipalities individual recommendations for adjusting the assessment rates, which will also be published online. These recommendations are based on a comparison of the volume of the new measurement amounts with the values ​​under the old law as of January 1, 2022. Ultimately, the decision on the specific assessment rates rests with the local parliaments. Reliable figures from the tax office should be available by summer so that the municipalities have enough time to decide on the new assessment rates and include them in the budget planning for 2025.

The previous calculation of property tax was declared unconstitutional by the Federal Constitutional Court in 2018 because it did not correctly reflect the actual value development of properties. The new reformed property tax is scheduled to come into force from 2025 to counteract these deficiencies.