last Friday, has informed the Federal Finance Minister, Olaf Scholz (SPD), with its state colleagues on a compromise on property tax reform. Really happy the Participants were. The matter has proved to be a little more complex than some people thought, after the Federal constitutional court found in the previous collection of the tax in may that it was unconstitutional to exist because, given the completely outdated base values from 1964 (West) and 1935 (East), underlying the taxation, large deviations of the actual values.
introduced As the Scholz and then, in November, his model, was the last a lot of time. Now the pressure is because, according to the ruling, the recast until the end of 2019 must be present, even if the tax is to be collected on the new basis until 2025. The suggestion of Scholz, a value-based tax, attracted widespread criticism. The Union faction in the Bundestag of Bavaria, the FDP and the real estate and landlord lobby were a number of fundamental reasons against it, because you want a model that is not value-dependent, and alone space. Skeptical of the tenants ‘ associations were, the countries, the model was too complex (you don’t want to tie up too many financial officers). The approval came mainly from the social Democrats.
Like the between the compromise of Friday look like?
The Scholz model of a value-dependent tax had five parameters: soil guideline value, net cold rent (actual for rental, as well as fictional on the basis of statistical approximate values in the case of owners), the age of the buildings, land area and floor space. The Minister of Finance wanted a justice issue, all of a valuation for a single subject – at about 35 million objects is not a simple thing, even if all of the data that needs the Scholz model, are present in the rule.
The countries were, and that instead of a single rating a three times the Flat rate should apply. For one thing, the so-called list will be applied to rent, which is derived by the Federal Statistical office from the microcensus. The exception is: net rent significantly lower than these average Rents in a community, then actually paid Rent may be used.
The age of the building is estimated at the portfolio of existing policies: year of construction before 1948 are taken as a uniform value. And the most important measure of value, the land value – it is enough in Berlin in sought after inner city neighborhoods up to five times of the value in suburban edge areas, will be estimated by the ability to form in cities of larger zones. The same applies for “main values” in smaller municipalities. This makes things easier to manage, dampens but possibly also to large intra-local Value spreads. In the case of objects in mixed-use and pure commercial real estate, in which there is no role Rents play, should there be a simplified property valuation method.
How is calculated the tax?
It remains in the same procedure as before. The values and areas are determined and assembled into a unit value, which is then reduced by means of the single tax measure – you should be 0,325 ppm (3.5 ppm) – significantly, on what the local authorities autonomously determine a rate of assessment, the tax sum is determined. An example: land and property are estimated at 500,000 Euro, by means of the control measure, a basic value of 162 euros, which is then multiplied by the assessment rate. In Berlin is currently at 810 per cent. You would then end up with about 1300 euros for the year.
Since the stated aim of the revenue-neutrality, Scholz and the land Minister that the rate of the municipalities to be reduced in a final adjustment step. The tax to a total, i.e., nationwide, than it is now. In 2018, there were nearly 14 billion euros.
The Federal Ministry of Finance is to ensure that more loads will follow in the frame of a higher two-digit sum in the year. More tax is likely to be a particular need for owners and tenants in the areas and regions where the real estate values recently have risen sharply. In Berlin, moreover, due to the current low rating in the Eastern parts of the city are to be expected especially with higher payments. But then also more likely to be in Friedrichshain, or Mitte as in Marzahn, or Köpenick.
Will the decision be implemented from Friday?
The is open. That Bavaria’s Prime Minister Markus Söder (CSU) is dissatisfied, was to be expected. The free state is for a pure surface model, i.e. the reversal of the value – and thus asset-based tax. So also the legislative disaster began when the inheritance tax – the CSU has made it to the coalition issue, in the end, the compromise was totally different. However, the CDU in the Bundestag cautious approval to resonate. Group Vice Andreas Jung welcomed the consolidation into a Lump sum. You meet the demand of the Union to a “simple model”. However, there is still a need for talks in the valuation of commercial real estate.
Why should it necessarily be a value dependent on the model?
for two reasons. For one, it is considered to be the more equitable solution, because higher values can also be higher taxed. Here are the basic tax is practically like a small wealth tax. In particular, the SPD, and this is important, also the greens and the Left are in favour of a value model. It is closer to the principle of taxation according to efficiency. The second reason is a constitutional legal risk is: The Federal government has, in the view of some lawyers, according to the current constitutional position, which goes back to a fundamental law of reform of 1994, only the legislative competence when the current value-based property tax. A new approach without the value component, as in the case of a pure land tax, would trigger the jurisdiction of the countries. Although this is controversial, but it might just lead to lawsuits in Karlsruhe, Germany.
by the Constitution, it is, however, with the lump-sum value of the model is by no means on the safe side. The Potsdamer law Professor Thorsten Ingo Schmidt told the daily mirror that in the case of a triple Flat-rate – rent to be net age, land value and zoning of a certain risk ending up in Karlsruhe. For example, because of the from the point of view of Schmidt’s questionable selection of the year 1948 as the date for the old-age lump-sum. There is finally a lot of real estate from the 1930s, which were of little value, but many gründerzeit buildings, the very wanted and therefore valuable. New buildings will in future be taxed higher than old buildings.
How is it with the pure control Surfaces?
you will not be promoted by their supporters as a fairer tax, because it goes back to values and assets. Especially in the big cities would be leveled with a land tax, the significant Expansion, as a result of the development on the real estate market, especially in the last decade. For renters in sought-after city that is relevant, if it remains in the case of the tenant levy. The distribution there is likely to be in the coalition is still in dispute because the Union wants to flirt to hang on to her, the social Democrats, Left and Green – with its abolition. On the other hand, the same plot sizes are in the surface model, but taxed at the same rate – the millionaire in Zehlendorf as high as the average employee in Spandau. This is perceived by many citizens as unjust.
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And there is the risk of lack of Federal jurisdiction. However, different tax laws in the other countries, probably not too big a Problem: even now, there are due to the different local rates substantial regional differences. In the cut (end of 2017) in Schleswig-Holstein, at 390 percent, in Saxony, at 495 percent, in North Rhine-Westphalia, at 567 percent. The municipal level, the rates of 80 per cent (Ingelheim am Rhein) to 960 percent (Nauheim).
