Property Tax (Grundsteuer)
Property tax must be paid by every private owner for their property. The relevant tax office determines the assessed value of the property based on factors such as land value, area and age. This assessed value is then multiplied by the property tax index figure (Grundsteuermesszahl). The property tax index figure is calculated depending on the type of property, the federal state and, in the new federal states, the size of the municipality. The assessment is then transmitted to the relevant city, which multiplies the calculated value by a collection rate (Hebesatz) based on the residential area. Fundamentally, the calculation distinguishes between Property Tax A and B, which affect the property tax assessment figure determined by the tax office. Property Tax A applies to agricultural and forestry land (e.g. farms, arable land, forest holdings). Property Tax B applies to all other properties (rental and commercial properties, residential property, etc.).
Property Tax Remission for Landlords in 2020
A property tax remission is intended to support landlords affected by the coronavirus crisis. They are entitled to a partial remission of property tax if they record substantial rental losses for which they are not themselves responsible. Applications for a partial remission of property tax for 2020 had to be submitted to the tax offices of the relevant city by 31 March 2021. Two scenarios are distinguished here. The first scenario covers landlords whose rental loss exceeds 50% compared to gross income. Gross income is defined as an estimated annual gross rent on a calendar basis (§ 33 Abs. 1 Satz 4 Nr. 2 GrStG), which is calculated by comparing the customary rent for similar properties. If this applies to the landlord, 25% of the property tax for 2020 will be remitted. The second scenario covers landlords who record an income loss on a property in calendar year 2020. In this case, property tax may be remitted by 50% for calendar year 2020. Landlords recording an income loss due to a vacant property are treated separately. They can only reduce the property tax by 50% if they can demonstrate that they nevertheless made efforts to find new tenants. Evidence such as invoices for a real estate agent or an internet portal should be available for this purpose.
Frequently asked questions
Frequently asked questions
Who can apply for a property tax remission for 2020?
Landlords who experienced significant rental losses through no fault of their own in the 2020 calendar year may apply for a partial remission of property tax (Grundsteuer). The prerequisite is a verifiable loss of income from the rented property. The application must be submitted to the tax office of the competent municipality.
By when must the application for a property tax remission for 2020 be filed?
The application for a partial remission of property tax (Grundsteuer) for 2020 must be submitted to the relevant municipality or tax office by 31 March 2021. This deadline is a strict cut-off period (Ausschlussfrist).
What is the level of property tax relief for rental income losses?
If rental losses exceed 50% of the gross income, 25% of the property tax is waived. In the event of a complete loss of income from the property, 50% of the property tax can be waived.
What evidence is required for property tax relief on vacant properties?
For vacant properties, the 50% relief is only granted if the landlord can prove active efforts to find new tenants. Suitable evidence includes invoices from real estate agents or listings on property portals.
What is the difference between Grundsteuer A and B?
Grundsteuer A (property tax A) is levied on agricultural and forestry properties such as farms, arable land, or forest holdings. Grundsteuer B (property tax B) applies to all other developed or developable properties, including residential property as well as rental and commercial real estate.