Monday, April 15, 2019

Talking Property Taxes in Germany

By the end of 2019, Germany will have delivered (for better or worse), a new property tax system.  The German Supreme Court ordered the revision to occur.

Right now, it's drifting to a particular formula.  I sat and read over a piece this morning in the news, which property experts are now going fairly negative, over the extent of the formula, and the complex nature that it's been constructed.

They gave two examples (of the more extreme), noting first, if you lived in Dresden....with a house over 50 years old, sitting on roughly 700 square meters of ground....would go from today's property tax of 31 Euro a year.....to 1,538 Euro a year.  Yeah....it's a shocker for those folks.  The second example was a Berlin property, with 500 sq meters of ground space, and currently at roughly 700 Euro a year....but escalating on up to just over 5,000 Euro. 

Massive anger coming up?  Yes.  My humble guess is that most folks would have accepted doubling up on their property tax, without a lot of heartburn.  Once you say it goes triple or quadruple?  That will trigger public frustration. 

What I suspect will occur over the next three years?

1.  This property tax revolution will be turning into a top five political topic, and hurting both the CDU and SPD parties.

2.  Some folks will evaluate their taxation situation (especially if this adds up to 4,000 Euro a year) and probably starting a process to sell the property and moving to a more rural area or smaller village.  You might find that some property values have gone down when you look at the new taxation rates, and some properties might be harder to sell. 

3.  Some city council political values are going to be challenged, particularly on budgets, and cultural items with no real return value to the general public. 

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