Property Tax in German News

There is an interesting episode that will unfold today in a German court.  Focus (the German news magazine) told a good introduction to the story.

The national Constitutional Court will decide on the legality concerning the German property tax.  Just about everyone who owns a house....has concerns.  City managers have concerns.  And even renters have concerns.

If you go and talk to most Germans....they will all tell you that their local city (who is getting the property tax) is hyped up and spending money at a fantastic rate.  Some will even go and suggest that control of local city spending is now an issue, and they don't know how to really monitor or halt bad practices.

So the court is looking over the rules.  There are generally three pieces to the property tax.

1.  Unit value (which matters if the property is developed, or undeveloped).

2.  The basic tax measurement (telling you what percent of the property is taxable),

3  Then something called the 'lifting set', which is a rate that each city will individually determine.  You could live in one town and get a certain 'set', and a mile away....another town....with a fairly different 'set'.

You come to this odd fact....property tax for the roughly 35 million properties in Germany....has nothing to do with current market value.  Shocker?

Most Germans will tell you that there is no fairness about this whole property tax discussion.  Values in rural areas have fallen over the past twenty years.  Values in suburban neighborhoods have risen. The rural area towns and villages are having problems in covering their budgets.

All of this worries real estate analysts, government budget folks, and city planners.  If the court hands down some radical view of the whole thing and says fairness has to exist across all of Germany....no matter if you live in the east or west, rural or city environments......then there's going to be chaos.  Some folks who are paying 500 Euro a year on their property tax will wake up and view some bill in two years of 1,500 Euro and wonder where all this fairness came from.

UPDATE: Noon, Court passed judgement.....whole law on property tax is NOT fair.  Will demand a change to the law.  In some ways, this scares the crap out of some property owners.  Focus suggests that the city governments of Germany draw around 14 billion Euro a year on property taxes.  My guess is that virtually everyone will pay more, and Germans will wake up in three years to a couple billion over the current rate.  Those with high-end properties?  They will probably be screwed the most.....plus those with high-end apartment situations.