Money Matters - Court confirms constitutionality of property tax.
Starting from 2025, there will be a new method for calculating property taxes throughout the country. The Federal Constitutional Court mandated this change because the previous method used outdated data from 1935 in East Germany and 1964 in West Germany. Approximately 36 million properties need to be reassessed. In Baden-Württemberg, the land value model is utilized, which considers the land itself, not what is on it.
The Finance Ministry asserted that they are satisfied with their legal stance, indicating that the land tax is constitutional. As asserted by the Ministry of Finance under Minister Danyal Bayaz (Greens), "There will be no alterations in the existing process for property owners." The municipalities will set the new tax rates for the property tax over the next few months. Based on these rates, the property tax for 2025 will be determined. Once done, the property owners will receive their new property tax notices.
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The decision by the Federal Constitutional Court has significant implications for real estate owners nationwide. In response to this ruling, Stuttgart, a major city in Baden-Württemberg, has begun reevaluating property values using the land value model. The changes in property tax calculation methods will impact finances for many residents, including those in Southwest Germany.
Critics argue that the new property tax system may disproportionately burden homeowners, leading to protests and legal challenges. This controversy has reached the Federal Fiscal Court, known as the tax court, which is now responsible for addressing these concerns. In light of this, politicians from East Germany and West Germany have voiced their opposition to these changes at the Federal Constitutional Court.
