Property tax reform

Property tax is a tax levied by cities and municipalities on real estate, i.e. land (developed or undeveloped). It is generally paid by the owners, but can be passed on to tenants.

Because the valuation of property, on which the property tax is currently based, is completely outdated. The Federal Constitutional Court has therefore called for taxation to be based on more up-to-date values from 2025. This will also happen. In Rhineland-Palatinate, the reform laws passed by the federal government apply; there is no deviating state model here (as in Bavaria, for example).

The revenue from property tax remains entirely local and can be used flexibly. Your property tax is used to build schools, daycare centers, roads and playgrounds or to finance local cultural and sports activities. Every euro is spent right on your doorstep, so to speak.
The things that make your town worth living in could not be financed without property tax. So you pay property tax for the local community and therefore also "for yourself".
The reform also makes property tax future-proof, which is good news.

The tax offices are currently determining the new property tax values. The property tax assessment amount is calculated from these values and the statutory tax assessment figure. This is a separate procedure that is concluded with the property tax assessment notice that you have already received or will receive from your tax office. In this respect, the tax offices are also responsible for any queries or appeals.
The assessment notice is binding - also for the cities, which may not deviate from it. In a final step, they only apply their assessment rates to calculate the final property tax. There are at least two local assessment rates: one for property tax A (agriculture and forestry) and one for property tax B (residential and commercial). From 2025, a third assessment rate for undeveloped plots ready for construction (property tax C) can also be decided as an option. The assessment rates apply uniformly to all taxpayers and will be redefined for the new property tax from 2025.

What is important for you as a property tax payer is the change in value under the new law (compared to the previous law, which applies up to and including 2024). Whether your property is to be classified as particularly "valuable", less "valuable" or rather "average" under the new law (i.e. from 2025) is decided by the new federal property tax law, which is reflected in the property tax assessment notice from the tax office.
The cities have no influence on this assessment. With the assessment rates, all new values are only extrapolated equally. The ratio of the new values to each other, which results from the reformed federal law, is no longer changed by this extrapolation.

According to the new federal property tax law, whether you pay more property tax than before from 2025 depends primarily on the development in the value of your property compared to other properties within the city.
If the revaluation shows that your property has increased in value proportionately (e.g. because a previously favorable peripheral location has become a sought-after residential area), your property tax will probably increase. The increase may be more or less pronounced depending on the change in value. Conversely, it is of course also conceivable that the individual tax burden will fall or remain the same.
Because all property tax values will change as a result of the reform, all towns and cities will have to adjust their assessment rates accordingly. However, no municipality will increase its property tax revenue as a result of the reform!
The recalculation is necessary in order to keep property tax revenue stable, i.e. to collect a similar amount of property tax after the reform as before. The revenue flows into schools, daycare centers, playgrounds and roads, for example, and is urgently needed for these purposes.

The term is often misunderstood. It only means that the city will be able to keep its property tax revenue stable overall after the reform is implemented (i.e. in 2025) - i.e. that it will collect a similar amount of property tax in 2025 as it did in the years before the reform. The reform as such is therefore no reason for the revenue to change.
However, revenue neutrality does not mean that your individual property tax will remain unchanged. This is because if the revaluation shows that your property has increased in value comparatively significantly, then the property tax will increase in future - even if the total local revenue does not increase.
The really interesting question "Will I have to pay more property tax from 2025?" therefore primarily depends on the individual value development.

When the property tax assessments for 2025 are sent out. In the meantime, the tax offices will complete the outstanding assessments. The cities can then mathematically adjust their assessment rates to the new values. Only then can the new property tax be calculated for each individual. So until then, a little patience is required.

This is legally permissible in any case. However, the fact remains: no city will increase its property tax revenue because of the reform!
However, it may be necessary locally to increase the overall property tax appropriately from other perspectives (i.e. independently of the reform). Cities are legally obliged to balance their budgets. If the financial resources are not sufficient to fulfill their current tasks - e.g. because school renovations are urgently required - appropriate tax increases must also be considered. However, this can happen at any time and has nothing to do with the implementation of the property tax reform.

You can be sure that no city will decide on tax increases lightly. The councillors who have to make these decisions are citizens like you, who are committed to their city on a voluntary basis and are also taxpayers themselves.
Especially if there is to be an increase in overall revenue in 2025, when "the whole of Germany" is looking at the development of property tax in the individual federal states, you can be confident that your city has made the decision anything but easy.
At the same time, it should also be noted that the impact of an increase (even a significant one) on your individual property tax would remain moderate. This is because an increase in property tax revenue is distributed evenly among all property tax payers within the city. For the individual, this usually only amounts to a manageable sum. If, on the other hand, the individual property tax of individual taxpayers increases very significantly in 2025 (compared to previous years), this will primarily be due to the revaluation based on the reformed federal law.