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Germany extends deadline for property tax declaration

Property owners in Germany will have three months longer to submit a tax declaration, state finance ministers revealed on Thursday.

Published: 13 October 2022 16:57 CEST
Housing estate in Frankfurt am Main
A housing estate in Frankfurt am Main. Photo: picture alliance/dpa | Arne Dedert

The deadline for submitting the new property tax declaration will be pushed back from October 31st to January 31st, 2023. 

The decision to extend the deadline was made by the state finance ministers and Federal Finance Minister Christian Lindner (FDP) at a meeting on Thursday. It comes after Lindner revealed that barely one in three property owners had submitted their declaration by the start of October. 

Announcing the decision, Bavaria’s Finance Minister Albert Füracker (CSU) said that the extension of the submission deadline by three months would significantly relieve the burden on citizens, the economy, and tax consultants.

Lindner also welcomed the decision, telling reporters on the sidelines of the International Monetary Fund conference in Washington: “At present, there are other concerns and tasks that we have to take care of with priority.”

The FDP politician had previously argued for an extension of the deadline.

READ ALSO: Why Germany is mulling an extension to property tax deadline

Property tax reform

The reform of the currently property tax system, which is due to come into force from 2025, is one of the largest tax reforms carried out in Germany since the end of the Second World War.

The revamp was prompted by a decision from Germany’s Constitutional Court, which found that the tax rates were calculated unfairly.

Under the current system, the value of a property is calculated using records from 1935 in East Germany and from 1964 in West Germany, meaning many houses and flats are dramatically undervalued. 

Authorities must now revalue around 36 million properties using data submitted by the owners. This includes providing details such as plot size and living space, property type, construction year and the so-called standard land value via the government’s Elster tax portal.

However, experts have warned that the declaration is far too complicated for many people to fill out by themselves.

In addition, the reform has hit numerous technical snags along the way, with the Elster portal buckling under the excess traffic just days after tax authorities started accepting the property tax return. 

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PROPERTY

EXPLAINED: What fees do you have to pay when buying a home in Germany?

Few experiences in Germany will take you through the full German bureaucratic, tax, and legal experience the way buying property here will - and there are plenty of fees. Here's what you need to know about extra charges so you don't face a nasty surprise.

Published: 15 May 2024 12:52 CEST
Updated: 15 May 2024 15:16 CEST
EXPLAINED: What fees do you have to pay when buying a home in Germany?

One of the big reasons as to why property ownership is so low in Germany? The fees.

Depending on where you buy your own piece of paradise – you could be on the hook for taxes and fees that add up to over 10 percent of the purchase price! It’s a figure that’s high enough to make some wonder if the investment is worth it – and often used to explain why figures on German home ownership, at around 50 percent – are some of the lowest in Europe.

READ ALSO: Why is home ownership in Germany so low?

Land transfer tax

When you sign a contract to buy property in Germany, you’ll get a letter soon after from your local tax office – telling you how much land transfer tax you have to pay. Such a tax triggers whenever property ownership changes hands in Germany and needs to be paid by the new owner.

It’s calculated based on property value – most often the agreed purchase price – and varies depending on the federal state where the property is located.

The lowest transfer taxes are found in Bavaria – whose 3.5 percent rate is significantly lower than any other Bundesland. Five percent rates apply in Saxony-Anhalt, Mecklenburg-West Pomerania, Rhineland-Palatinate, Bremen, Lower Saxony, and Baden-Württemberg. 

Hamburg and Saxony follow with 5.5 percent rates, whereas Berlin and Hesse start going to the high end of tax rates at six percent.

At the highest end with 6.5 percent rates – lie North Rhine-Westphalia, Brandenburg, Saarland, Schleswig-Holstein, and Thuringia.

You won’t be able to add your name to the land registry – or Grundbuch – until you pay your tax.

READ ALSO: Why property prices in Germany are likely to rise this year

Real estate agent fee

In most German states, you’ll also have to pay your estate agent a commission amounting to about 3.57 percent of the property purchase price.

There are four federal states where this fee is lower though – and even a slightly lower percentage could make a big difference given the amounts involved. Hamburg and Mecklenburg-West Pomerania have commission fees of 3.18 and 3.08 percent, respectively.

At 2.98 percent, the lowest real estate commission fees are found in Bremen and Hesse.

These commission fees are also a reason why it may be an attractive option to buy a newer build property directly from a real estate developer – as you won’t pay any commission if you purchase from the developer directly. Private selling or buying foreclosed properties at a court auction also allows you to avoid this fee entirely.

If buying from a developer though, you may have to wait months or years to be able to actually move in though, as the places are often sold while still under construction.

EXPLAINED: What you need to know about buying property in Germany

Notary fee

No matter where you buy property in Germany, a notary must read out the contract in front of both parties.

This can be tedious and take hours – but the idea is to allow both parties the chance to ask questions on the terms of a neutral party.

Unfortunately, you’ll pay for the privilege and there’s no avoiding it. Notary fees are about 1.5-2 percent of the purchase price around Germany in most cases. Some shopping around might help you find a notary who charges the lower end at 1.5 percent.

If you’re not comfortable with legal German, you’re allowed to bring an accredited translator with you to the reading. This is, of course, at your own cost as well.

READ ALSO: Is it a good time to buy a home in Germany?

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