The two associations house
The so-called federal model, which is the subject of the legal report, was devised by the current Chancellor and then Finance Minister Olaf Scholz (SPD). It was criticized early on by tax experts as particularly complicated. The federal model currently applies in eleven federal states, including Berlin, Brandenburg, Thuringia, Saxony-Anhalt, Mecklenburg-Western Pomerania, Schleswig-Holstein, Bremen, North Rhine-Westphalia, Rhineland-Palatinate and, slightly modified, in Saarland and Saxony. Each of the other federal states have their own property tax laws.
The report lists a total of ten points that are supposed to make the Property Tax Act illegal. The arguments of Kirchof, who holds the chair for public law, financial law and tax law at the University of Augsburg, relate to several parameters that are decisive when calculating the new property tax:
Kirchhof considers the standard land value to be problematic because the values show “systematic valuation deficiencies” and are “sometimes hardly comparable”. The value is based on the property purchase prices in a municipality and the statistical net cold rent. The report sees the danger here that the principle of equality of the Basic Law will be violated through the strict application of the standard land value.
Kirchhof also argues that the law makes property tax unnecessarily complicated instead of simplifying it. Other experts see it that way too. A whole range of parameters are relevant for the federal model, including living space, year of construction, management costs, property interest rate and remaining useful life. Above all, the role of the age of the building contradicts the principle of equality.
Another point of criticism is the possible additional costs, which are disproportionate. “The final real estate tax burden is only certain when the communities have decided on the assessment rates,” says the report. “However, the structurally too high valuations of real estate due to incorrect land values or flat-rate net rents in view of the age of real estate, remaining useful lives or value-reducing factors that have not been taken into account will cause unconstitutional overloading.”
Kirchhof sees the property tax laws in Bavaria, Hesse, Lower Saxony and Hamburg as a good solution. “Countries are giving examples of modern tax laws that use few parameters and will soon be fully digitally applicable,” he writes. His principal house
The result of the report is not surprising. Kirchhof is one of the tax lawyers who have already commented on property tax in previous reports and before the Finance Committee of the Bundestag. As early as 2019, he expressed constitutional concerns. He also wrote an expert opinion for the Baden-Württemberg state association of the BdSt, in which he assessed the land value model there as illegal. Other tax experts, on the other hand, consider this to be good and practicable because it is considered to be particularly simple and comprehensible. Two procedures, among others, by BdSt and Haus
The associations have been calling for a house for weeks
However, a general objection to the real estate tax assessment is by no means sensible for taxpayers, but rather helps the lobby groups as argumentative substantiation and justification for their complaints. Nevertheless, taxpayers should check the notification promptly and carefully. If it actually contains errors, the deadline for a reasoned objection is tight.
Owners should compare the data in the notice with the data from the tax return. This is the only way to be sure that all values are correct or that false information is discovered. Otherwise, incorrect taxation will take place later, which can hit tenants hard, because landlords can pass the property tax on to them in full.
Reasons for incorrect notifications can be, for example, an incorrect standard land value or incorrect square meter figures for the living and property area. Property owners should definitely avoid these common mistakes. If taxpayers discover discrepancies, they must lodge an objection with the tax office within four weeks and justify it.
The mere finding that the property tax value has increased is not sufficient as a reason for an objection. In this case, the responsible tax office will most likely reject it. Because real estate and land prices have risen extremely over the past few years and decades, the values of real estate and land are also increasing. Even an objection based on constitutional concerns has little chance of success. Taxpayers would then have to take legal action against the rejection.
By the way: Should a court overturn a property tax law for constitutional reasons in a few years, the judgment would apply to all decisions and not just to those owners who have lodged an objection with the tax office.
Editor’s note: This article first appeared on CAPITAL.
