Real estate reform: the latest news from Germany

The German Parliament recently applied new property taxes. This reform provides a new model for the final calculation to be followed for the final sum of the total to be paid.

This provision was passed with a fairly large majority by German parliamentarians. But what are the new calculation methods?

The tax will be influenced by:
- The value of the area where the property is located
- The average rent
- The cadastral value
- The type of property

All this obviously includes a margin of autonomy on the part of the municipal administrations. Autonomy that will emerge through the choice of the coefficient to be used for the final calculation.

According to a first general analysis though. such a reform will not (at first) bring about a substantial change in the payment of the tax.
As in many European countries and beyond, even in Germany, the house tax represents one of the heaviest taxes. Automatically also one of the most significant entries for the state. The total calculated is around 14 billion euros annually.

The new tax, or rather the new calculation method, should start from 2025.
But why the Bundesrat opted for this choice?

The German tradition, in economic terms, is not so recent. Which is why many evaluation principles are particularly obsolete.
A further demonstration therefore of how, the German power, wants at all costs to stay in step with the times and not to back away for any reason.

The finance minister, Olaf Scholz, seems to be more than optimistic on the subject. The timing for calculating the tax will no doubt be reduced. An element to be reckoned with is also represented by the greater precision attributed to the final calculation of the tax itself. In fact, having inserted new valuation parameters, it is obvious how these can actually benefit the final definition of the total amount to be paid.

A diversification that will also be based on the type and value of the area where the property is located.

This choice will probably also influence the future buyers, who will choose their home in a balanced way also by virtue of these elements.

Let us also remember that Germany is part of a group of states where very few people buy a property. Reason for which, as we had anticipated, few will see the structure of the payment of real estate taxes changed.

The reasons for this mindset are mostly historical. Many people lost their property during the Second World War and did not have the chance to become buyers again.

A historical and cultural problem that obviously also spills over to the economic level. How will the situation in Germany evolve? To learn more, we invite you to follow our portal as always, so as not to miss a single news about the world real estate market!

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