Land tax: Federal and state governments agree on new model

04/02/2019

The German federal and state authorities agreed on a modal for calculating land tax on Friday. It is based on land value, average rent prices, and age of the property. Real estate associations are rejecting the concept: “This is not a compromise, but ultimately a value-based model in a different wrapper”, ZIA German Property Federation writes in a press release. Among other factors, the association criticizes the fact that the age of the property is included in the calculation, which spells a disadvantage for new buildings. The IVD calls it a “rotten compromise”. “This model is an exacerbated form of the cost value model that was abandoned in its time because of concerns regarding its constitutionality”. Ifo President Clemens Fuest, on the other hand, calls the agreement “acceptable”. “What counts is that there is no valuation of individual properties,” he says. The compromise model has not yet been passed by the Union party: CSU Head Markus Söder says the model needs to be adjusted, CDU politician Fritz Güntzler criticized in the “Frankfurter Allgemeine Sonntagszeitung” that the model is problematic for the valuation of commercial real estate.


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