Update on the Real Estate Tax Reform

The reform of the real estate tax in Germany is taking placenationwide, so that every property, regardless of its type and use, and thusevery landowner is affected. The determination of the new real estate taxvalues required by the reform requires active action on the part of allproperty owners in 2022. The tax offices of the individual federal states arecurrently informing property owners about the necessity of submitting thecorresponding declarations by means of publicly announced general decreesand/or personalized letters.

Individual letters from the tax offices and general decrees from the federal states

The tax offices of the German federal states are currently informing property owners about the necessity of submitting the corresponding declarations by means of publicly announced general directives and/or personalized letters. In some federal states of Germany such letters are currently being sent by the tax offices to all private individuals with real estate. The letters contain important information and data (e.g. file number, tax ID and location of the property incl. parcel number and district).

Please note:

• Individual letters are only sent to private individuals in some federal states. Corporations and
• partnerships as well as other entities with land ownership do not receive individual cover letters.
• They must act independently and collect declaration-relevant data (e.g. assessed values and
• corresponding file number) without additional reminders or notification of relevant data from the
• tax office.
• When receiving letter those will be separate for each economic unit for which an assessed value
• has been determined so far. It is therefore possible that you will receive a large number of
• corresponding letters. Each of these letters is needed for the preparation of the upcoming
• declarations and should therefore be carefully stored.
• The letters are sent to the private property owners without exception, even if a power of attorney
• to receive has been granted to the tax advisor. The tax advisor therefore does not have the
• information letters. You are welcome to forward these letters to your tax contact partners -
• especially in the event that we may assist you in connection with the real estate tax reform.
• Agricultural and forestry enterprises whose assessed value previously included a residential
• part will receive a corresponding file number in a separate letter to record the residential part as
• real property, which must be retained. 

Resulting need for action

Between 01.07.2022 and 31.10.2022, property owners and persons entitled to transferable leasehold land rights must, as a matter of principle, electronically transmit to the tax authorities the information required for the determination of the real estate tax value within the scope of an assessment declaration. The information required in individual cases depends on the location and type of the property. Due to the partially deviating state-specific regulations, different information is required in some federal states, as Baden-Württemberg, Bavaria, Hamburg, Hesse, and Lower Saxony apply their own valuation models, which deviates in certain aspects from the federal valuation model.

After the real estate tax reform, the federal or value model exist both for agriculture and forestry (real estate tax A) and for developed and undeveloped land (real estate tax B). In addition, certain federal states have developed their own models for determining the real estate tax for developed and undeveloped land (land tax B) against the background of the introduced state opening clause. This includes, for example, the federal state of Bavaria with a property area model. In the context of real estate tax A, all federal states uniformly apply the federal model. Some federal states (e.g. Baden-Württemberg) have also introduced a so-called real estate tax C for undeveloped land prepared for development, in order to create in this case an additional incentive for the construction of buildings.

For real estate used for agriculture and forestry, various general data on the property (e.g. address, district, parcel, etc.), the size of the property, the type of use and other diverse agricultural and forestry data (e.g. yield measurement number, the area of growth, etc.) must be declared. In addition, the so-called residential part will in future no longer be considered as part of the economic unit "agricultural and forestry enterprise"; this will be valued separately according to the respective applicable model for real estate. In particular, the determination of the land area to be allocated to the residential part should be initiated at an early stage

When applying the federal model with regard to (un)developed land, general information (e.g. address, district, land parcel, etc.), the size, the standard land value and the residential or usable area or gross floor area must be declared, among other things.

If the Bavarian model is applied, on the other hand, less information is required within the scope of the declaration of assessment. In addition to the general information, it is sufficient to submit the size of the land and the residential or cultivated/productive area.

Unfortunately, the parameters to be declared are usually not readily available in full to the taxable landowners, but can be obtained from various sources. However, data research in this context can be time-consuming in some cases. We therefore recommend that you start compiling the data as soon as possible in order to ensure, that it is submitted on time.

Support from Crowe Kleeberg

In addition to a team of experts, Crowe Kleeberg supports you in the context of the real estate tax reform with the use of DATEV-compatible software which, among other things, enables you to enter the necessary land and property data by means of direct access and thus also allows you to pre-record the data to be declared at an early stage. The software also enables the digital import of mass data, especially for clients with many properties, when the Excel templates provided by the software provider are filled in.

In addition to the mass data import, Crowe Kleeberg also has the possibility of obtaining real estate tax-relevant data for clients from various sources. This includes, for example, the real estate register, which will set up an access/download option specifically for tax advisors from 01.07.2022.

Once all data are collected, the necessary data and information can be imported into the software. Beginning 01.07.2022, the declarations can be transmitted electronically.

In special individual cases, e.g. in cases of heritage monuments, special properties such as castles or in the case of properties spanning several municipalities, there may be a need for separate coordination and consultation. Such individual questions should ideally be addressed at an early stage to ensure a timely transmission.

Conclusion

Against the background of the current real estate tax reform, real estate tax values must be determined for the valuation date as of 01.01.2022. The information required for this determination is to be declared electronically by property owners between 01.07.2022 and 31.10.2022.

This only allows a short period of time for the declaration of this information and appropriate preparations should be made in advance. For example, a start should be made at an early stage on compiling the necessary information or organizing the necessary requests for information. If you receive corresponding letters from the tax office for individual properties, these should be kept and coordinated with your tax advisor.

If you would like to request tax services with the preparation/submission of the declarations of assessment, you are welcome to contact your individual contact person of Kleeberg or send an e-mail to [email protected].