German Property Tax Calculator 2026

The New German Property Tax (Grundsteuer): What Property Owners Need to Know

Germany underwent a fundamental reform of its property tax system that took effect on January 1, 2025. The old system, which relied on property valuations from 1964 (West Germany) and 1935 (East Germany), was declared unconstitutional by the Federal Constitutional Court (Bundesverfassungsgericht) in April 2018. The court ruled that the outdated valuations violated the constitutional principle of equal treatment, as identical properties in different locations could face vastly different tax burdens based on decades-old assessments.

For expats who own property in Germany (whether as a home, an investment, or inherited real estate) the new property tax system is directly relevant. The reform affects approximately 36 million properties across the country and has resulted in significant changes to tax amounts for many property owners.

Property Tax A vs. Property Tax B

The German Property Tax Act (GrStG) distinguishes two types:

• Grundsteuer A (agricultural): Applies to agricultural and forestry operations. Valuation is based on the earning capacity of the land.
• Grundsteuer B (built-up): Applies to all built-up and undeveloped land not used for agriculture. This includes residential buildings, commercial properties, rental apartments, and undeveloped building plots.

For most property owners, including the vast majority of expats, Grundsteuer B is the relevant category.

The Three-Step Calculation Under the Federal Model

Under the federal model (Bundesmodell), which is used by 10 of the 16 federal states, the property tax is calculated in three steps:

Step 1: Property Tax Value (Grundsteuerwert)

The tax office (Finanzamt) calculates the property tax value based on the information you provided in your property tax declaration (Grundsteuererklärung). The key factors include:

• Land reference value (Bodenrichtwert): The official land value per square metre, determined by the local valuation committee (Gutachterausschuss)
• Property area: Total size of the plot in square metres
• Building type: Whether residential (apartment building, single-family home, etc.) or commercial
• Year of construction: Used to determine the remaining useful life
• Living area: Total living space in square metres
• Statistical rent level: Based on the local rent index (Mietniveau-Stufe)

Step 2: Assessment Amount (Steuermessbetrag)

The property tax value is multiplied by the assessment number (Steuermesszahl):

• Residential properties: 0.031% (0.31 per mille)
• Non-residential properties: 0.034% (0.34 per mille)

For example, a residential property with a property tax value of €300,000 would have an assessment amount of €300,000 x 0.031% = €93.

Step 3: Property Tax (Grundsteuer)

The municipality multiplies the assessment amount by its collection rate (Hebesatz). Collection rates vary enormously, from under 200% in some rural areas to over 900% in individual municipalities.

Using the example above with a municipal collection rate of 500%: €93 x 500% = €465 per year (approximately €116 per quarter or €39 per month).

Alternative State Models

Six federal states have implemented their own property tax models instead of the federal model:

Revenue Neutrality and Collection Rate Adjustments

A central political promise of the property tax reform was revenue neutrality: the reform should not increase total property tax revenue at the municipal level. To achieve this, many municipalities adjusted their collection rates (Hebesätze) downward when switching to the new system, because the new property tax values tend to be higher than the old unit values.

However, revenue neutrality applies only at the aggregate municipal level, not for individual properties. Due to the more accurate valuations, some property owners see their tax bills increase while others see decreases. Properties in areas where land values have risen substantially since 1964 (particularly in major cities) tend to face higher property tax, while properties in areas with stagnant values may pay less.

Property Tax as an Operating Cost for Tenants

Under §2 of the Operating Costs Regulation (Betriebskostenverordnung or BetrKV), property tax is an allocable operating cost. This means landlords can pass the property tax on to tenants through the annual operating cost statement (Nebenkostenabrechnung). For many tenants in Germany, property tax is included in their monthly advance payment for operating costs.

As a tenant, you should review your annual operating cost statement to verify the property tax amount. Following the reform, changes in property tax should be reflected in your operating costs. If the property tax decreased but your advance payment did not change, you are entitled to a refund.

Objections and Legal Remedies

If you disagree with your property tax value assessment, you can file an objection (Einspruch) within one month of receiving the assessment notice (Grundsteuerwertbescheid). Common grounds for objection include:

• Incorrect property area or living space recorded
• Wrong building type classification
• Incorrect year of construction
• Errors in the land reference value applied

Several constitutional challenges to the new property tax system are pending before various courts. Some legal scholars argue that the federal model's reliance on statistical rent levels creates new inequalities. Property owners may want to file objections as a precaution to keep their cases open in the event of a favorable court ruling.

Practical Tips for Expat Property Owners

• Verify your assessment notice: Check that all property details (area, building type, construction year) are accurately recorded. Errors can lead to an inflated tax bill.
• Compare with neighbors: If your property tax seems disproportionately high, compare your assessment with similar properties in your area to identify potential errors.
• Budget for quarterly payments: Property tax is typically paid quarterly (February 15, May 15, August 15, November 15) or in a single annual payment.
• Include in rental calculations: If you own rental property, factor the new property tax into your rental yield calculations. In some locations, the reform may significantly affect profitability.
• Keep records for tax purposes: For rented property, the property tax is a deductible expense in your income tax return as part of the operating costs you bear as a landlord.
• Consider filing an objection: Given the ongoing constitutional challenges, filing a precautionary objection against your assessment notice may be prudent.