How is land tax calculated in Germany
Land tax is one of the types of fixed additional costs for real estate. We tell where it comes from and how much to pay.
After acquiring the property, the new owner is assigned a certain tax rate at which he is obliged to make contributions to the federal state budget once a year or quarterly: until February 15, May 15, August 15 and November 15.
If the object is leased, the tax may be fully or partially transferred to the tenant as part of the associated maintenance costs of the premises.
As a rule, real estate tax is one of the main sources of income for federal lands and is also assigned by them. The tax rate is formed from several factors: the conditional (fictitious) cost of the plot is taken as a basis and multiplied by the interest rate, after which the tax base is multiplied by the land tax rate. The average tax rate in Germany ranges from 300 to 600 euros per year for a 2-room apartment. This is significantly less than in other European countries.
These parameters and the value of rates may vary depending on the type of object, federal land, city, district, size of the site, time of construction and even the number of inhabitants in the district.
The interest rate for owners of single-family and two-family houses in areas subject to type B is from 2.6 to 3.5 per mille, that is, 2.6 or 3.5 thousandths, or 0.0026 and 0.0035, respectively. For example, the standard unit cost of a single-family home is € 100,000, and the rate of increase of the local community is 300%. To calculate the tax base, you need to multiply the conditional unit of 100,000 by 2.6 ppm = € 260. The amount of land tax in this case will be € 260 x 3 = € 780 per year.
The problem that the German State Court drew attention to in April 2018 is that the conditional price of the object is taken from the database of 1930-1950 and significantly lower than the current value. Previously, this problem was solved through an artificial increase in the interest rate of the community. But it showed inefficiency and it was decided to revise the tax process.
We advise on all tax matters for both Germany and Austria and Switzerland. For you, we will calculate all taxes on real estate, if necessary, we will help with drawing up a tax return and paying taxes. The real estate fiduciary service also includes all tax issues.
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