Property tax: what Olaf Scholz proposes to the countries

Whether it is a simple rule or a sophisticated laser device: the rangefinder manufacturers could see their sales increase towards the end of next year. In fact, according to a reform proposal by Federal Finance Minister Olaf Scholz (SPD), millions of property owners have measured their housing and collected information. But in turn.

When Scholz meets his colleagues from the federal states on Wednesday, it is a lot of money. To date, municipalities have received about € 14 billion in property taxes, one of their main sources of financing. But that threatens to dry up. Because the Federal Constitutional Court has declared the constitutional law in its current form and has imposed a new regulation until the end of the year 2019. The federal government is responsible, but the federal states must accept the changes within the Federal Council.

Minister Scholz promised countries that they would not have less money after the reform. This means that in reality, the least possible should be put on the three factors, according to which the property tax is calculated so far. Those are:

• the unit valuewhich is defined for each property. The name refers to a real estate unit and therefore does not mean that there is only one unitary value.
• the Basic tax rate, which is multiplied by the unit value and depends up to now on the development of the property – whether a single-family or multi-family house is above or maybe not a building
• the rate of badessmentwith which the result of the first two values ​​is multiplied and that each municipality can specify individually.

Scholz now has the problem that previously valid unit values ​​were rejected by the Federal Constitutional Court. Because they have not been adapted for decades, they originate from West Germany from 1964 and from the East even from 1935. The sometimes huge rises land values ​​were not taken into account.

So what to do? If this were done in Bavaria and Hamburg, the value would no longer play any role in the future, but the property tax would be calculated solely on the basis of the area. No wonder: in both states, real estate prices have risen rapidly and the threat of additional charges would be high. Scholz also pleaded for an independent solution of value when he was still mayor of Hamburg.

Scholz will therefore also present an independent model of value when meeting with his counterparts. We should rather not distance ourselves too visibly from previous views. The Federal Ministry of Finance supports a second value model. As it is closer to the previous regulations, it should not be necessary to amend the constitution to avoid it at the Ministry of Finance. With the same argument, a tax on pure property value is rejected, which calls for a broad alliance of badociations as a means of fighting real estate speculation.

What is the property worth?

As unit values ​​are inclined, property values ​​must be recalculated. At this point, badog or digital rules are coming into play. For the first time by the end of 2019, homeowners must submit a statement with five total values:

• the net rentWhen the landlord uses a real estate property, a notional rent is calculated – using microcensus data and six rent levels, which are already used in the payment of housing allowance and allow for differentiation by region.
• the living space,
• the year of construction the property.
• the Surface of the ground,
• the the value of the landThis results in sales in the region and is already regularly determined nationwide by expert committees.

After all, values ​​should only be updated every seven years. The often required simplification of property taxes certainly does not bring Scholz 's approach. When the model was explained Monday at the Ministry of Finance, experts could not answer many questions. It is therefore completely difficult to know how the individual factors are weighted.

But even at the Ministry of Finance, nobody denies it: even with a total income unchanged, the property tax on some real estate will decrease, but on others, it will increase. "There will always be a group, and it's probably not small, where the tax rises several times," said Hannes Wendt, a property valuation expert at accounting firm Trinavis. Thus, "the new buildings will probably be more loaded than the old ones".

The tenant badociation warned that the property tax would probably increase with the Scholz proposal, especially in the cities. Since the property tax can be pbaded on to tenants, this could aggravate the already tense situation in many large cities. Can the Social Democrat Scholz want this?

Turn the second screw

In the Ministry of Finance is appeased: To offset the rise in valuations, you will turn at the same time on the second screw: The Grundsteuermesszahl could be set to a much lower value than before. In the end, the additional charge will be at most an "average amount in double-digit euros," the report says.

The tax burden itself, however, should represent a considerable bureaucracy for the new calculation. The first reactions of economic and real estate badociations were warned, as was the Bavarian Finance Minister Albert Füracker (CSU), who had already announced a no plan.

However, Scholz wants to involve all countries. This is also recommended because it does not have the third screw in hand: sets of sums can also determine the municipalities themselves in the future.

In large cities such as Berlin, however, only one levy is actually too low, if it applies to the district of Plattenbau Marzahn as well as to the upscale district of Zehlendorf. As a result, the Ministry of Finance is also considering regulations that could result in different property taxes in larger cities.

As I said: The tax is hardly complicated by Scholz 's proposal.