Property tax flat rate
The so-called property tax unit value is determined by the responsible employees of the tax office.
The so-called unit value is always used as the basis for all calculations relating to property tax. This is a market value of a property that has been determined by the authorities. However, these values have not been adjusted in the western federal states since 1964, and not even since 1935 in the east of the Federal Republic. Of course, the real estate and land market has changed significantly since then. We will come back to this problem later.
The level of the unit value of a property depends on various factors, such as the size and location of the property, the age of the building and the type of development. The amount of a possible annual rent and the size of the usable and living space are also decisive criteria.
The base tax base
The property tax base is an additional factor for calculating property tax. This is to be understood as a fixed per thousand rate , the amount of which depends on the size of a community and the type of development. In the west and east of Germany, the per thousand rates are always the same, although they are significantly higher in the east than in the west – due to the old standard values from 1935. A distinction must also be made between new and old buildings. Houses that were built before 1924 are considered old buildings.
The property tax assessment rate
A third factor for calculating property tax is the so-called assessment rate . The municipalities set this through a council resolution. At over 800 percent and thus particularly high, the assessment rate is, for example, in the cities of Duisburg and Berlin. In structurally weak regions in eastern Germany, on the other hand, the percentage is significantly lower.
It is quite astonishing that the assessment rate in the megacities of Munich and Cologne by no means takes a top position nationwide. The cities of Dresden and Chemnitz, for example, have significantly higher rates of assessment. Across the federal states, Hessen has the lowest average assessment rate, while North Rhine-Westphalia and Saxony have the highest.
Property tax relief
In some cases, as a landlord, you can apply for a so-called property tax exemption from your local authority. Of course, this must be justified.
Many of the relevant applications are primarily related to:
- an empty apartment that has not been rented
- a rent loss or rent decrease (if, for example, tenants can be shown not to pay their rent)
granted. How high your possible loss of rent must be in order to be able to hope that your application will be granted depends on several factors. Many details on this can also be found in Section 33 of the Real Estate Tax Act . In addition, it must be ensured that you, as the landlord, are responsible for the loss of rent or the decrease in rent, for example because you have estimated a rent that is too high over a long period of time and your property has therefore not been let.
How is property tax calculated?
Property tax and its calculation is currently in a state of upheaval due to a ruling by the Federal Constitutional Court.
The following formula currently applies: Unit value * tax base number = base tax base amount
After that, the said property tax base must be multiplied by the assessment rate.
However, since the aforementioned unit value in particular has come under increasing criticism, the formula after the reform and thus from 2025 could be as follows:
Property value * tax index * assessment rate.
Calculation in general
In the course of calculating property tax, however, far more complex relationships must be taken into account than a look at the formulas mentioned above would suggest. Because how much a property is worth naturally depends not only on its size, but also on the corresponding location. For example, single-family houses with the same number of square meters but at different locations can result in completely different property tax sums, even if the assessment rate and the tax base number are identical.
Let us assume that a condominium has a unit value of 50,000 euros. This amount is then multiplied by the tax index 3.5 out of a thousand, resulting in a property tax amount of 175 euros. Now this value is multiplied by the tax rate of 400 percent – i.e. the factor 4 – which results in an annual property tax of 700 euros. Or expressed in the formulas shown above:
- 0.0035 (tax index) x 50,000 euros (unit value) = 175 euros (property tax index)
- 175 euros (property tax base) x 4 (assessment rate) = 700 euros property tax (per year)
Property tax calculator – online & free
Especially in connection with the purchase of new real estate, it is of course important that you have as comprehensive an overview as possible of the costs that you will be confronted with on a regular basis.
You can plan optimally with the help of a free online property tax calculator. Your job is only to enter the corresponding sums. The calculator determines the result based on your data immediately afterwards. You will find various input fields in which you can, for example, enter the location of the property or the property and the unit value. In addition, you have to select whether the property or property is in the old or new federal states, whether it is an old or new building and which type of building is involved in the calculation. As a result, you will receive the amount that you will likely have to pay annually to the tax authorities as property tax.
A particular advantage: you don’t have to worry about the current legislation being taken into account. The currently valid formula is already stored in the free online property tax calculator.
How much property tax can I pass on to my tenant?
In general, property tax is one of the so-called apportionable ancillary costs . However, this must be anchored in writing with a regulation in the rental agreement. It must therefore be stipulated in writing that the property tax that is due for the building is calculated, for example, proportionally according to the living space of the rented apartment and must be borne by the tenant. It is customary to apportion the property tax according to the area scale, but other distribution keys can also be chosen. These must also be agreed in writing in the rental agreement. How much of the property tax can be passed on to the tenant depends, among other things, on the size of the living space used by the tenant.