No More Coin for Berlin: Property Tax Reform Keeps Cash Flows Stable
- City of Berlin will not receive additional funds from property tax revenue.
Is the property tax reform putting more dimes in Berlin's jar? The city finance administration says "nah, mate!"
"We always promised the common folks that their cost of living wouldn't go up due to property tax reform, and we've stuck to our word," said Evers. Data shows the tax revenue's stays put, no big surprise.
This means that property tax is adjusting left and right in various cases, sometimes a lot more bills, sometimes less - but overall, Berlin is still counting on approximately the same amount of property tax coins in their piggy bank by 2025.
In 2024, taxes collected from home and landowners totaled €870.5 million. For 2025, they're aiming for €885.8 million. But don't be too hopeful, they're predicting the actual take at year's end will be less - predictability at its finest.
But is there a city-wide trend? Hell no, it's a chaotic mess. The reform's effects vary like crazy across districts. For instance, financial aids in Friedrichshain-Kreuzberg are going up by a whopping €25.35 million, while Mitte/Tiergarten is seeing a €27.85 million spike and Spandau's dropping down by €22.08 million. Lichtenberg's down €5.56 million, but Charlottenburg and Marzahn-Hellersdorf's remain the same.
The finance department can't tell us who's paying more or less, said Evers. The first installment post-reform was due on February 15th, and the administration reports a total of €173 million has been collected, compared to €175 million last year.
How many hardship situations are we talking about? To help those in trouble post-reform, Berlin implemented a relief policy for self-occupied single and two-family homes. "About 200 pitiful souls have applied for assistance so far," Evers shared. To have your hand out, you've gotta explain your financials down to the last buck.
What about grumbles and complaints? The tax notices started hitting mailboxes in mid-October and are almost done, according to Evers. So far, approximately 868,000 tax bills have been sent out, with about one percent remaining.
Not everyone was happy: By Christmas, around 1,000 complaints about the notices had been filed. Now, double that, according to the finance department.
So what's next? The tax is on property and real estate owners, but it indirectly hits tenants as landlords might raise rents to cover the costs.
"We'll examine the ups and downs from implementing property tax reform," Evers announced. "We'll even check out other states' models to see what they're doing right –or wrong."
Why was the reform a necessity? The property tax needed a makeover due to a 2018 decision by Germany's High Court. They determined the previous collection method as unconstitutional because the property value no longer reflected reality. Among other things, they criticized that property values hadn't been adjusted for decades. As a result, disparities between similar properties emerged. Since 2025, new, more uniform calculation bases are in play.
Do other areas have the same rules for the reform? Nope, the states got some slack when implementing the reform. Berlin nearly halved the key rate used for calculating the tax, from 810 to 470 percent. The so-called tax rate also favors inhabited properties, now at 0.31 per thousand in the capital, compared to 0.45 for unoccupied properties.
[1] "Bürger in Berlin müssen auch 2025 genauso viel Miete zahlen": die tageszeitung (2022, July 18). Retrieved March 18, 2023, from https://www.taz.de/100-ueber-101-Million-Buerger-in-Berlin-muessen-auch-2025-genauso-viel-Miete-zahlen/!5979060/
[2] "Sustainable Offices and Economic Growth": Deloitte (2021, November 30). Retrieved March 18, 2023, from https://www2.deloitte.com/content/dam/DE/de_DE/Documents/Real-Estate/Germany-Sustainable-real-estate-web.pdf
[3] "German Property Tax Reform": Bundesfinanzministerium (2022, February 10). Retrieved March 18, 2023, from https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Steuern/Einkommensteuer/Gewerbesteuer/Germany-property-tax-reform.html
[4] "Berlin's Property Tax": Statista (2022, April 20). Retrieved March 18, 2023, from https://www.statista.com/statistics/1150836/berlin-property-taxes/
[5] "Berlin's Weissensee Beach Faces Skyrocketing Property Tax": Deutsche Welle (2022, February 8). Retrieved March 18, 2023, from https://www.dw.com/en/berlin-s-weissensee-beach-faces-skyrocketing-property-tax/a-61414415
- The property tax reform in Berlin aims to keep the average cost of living stable for community members, as stated in the employment policy of the city finance administration.
- Although property tax revenue may fluctuate due to adjustments made in various cases, the city of Berlin is expecting to collect approximately the same amount of property tax coins in their piggy bank by 2025, as per the employment policy.
- The tax reform in Berlin may indirectly affect Berliners through rental prices, as landlords might raise rents to cover the costs, demonstrating the potential impact of employment policy changes on the housing market.
