date | theme

03. January 2022 | Property tax reform 2022: what is new?

03. February 2022 | The new property tax in Bavaria from 2025

04. February 2022 | Property tax in Baden-Württemberg from 2025

07. February 2022 | Property tax in Saarland from 2025

08. February 2022 | Property tax in Saxony from 2025

10. February 2022 | Property tax in Hessen from 2025

11. February 2022 | Property tax in the Hanseatic City of Hamburg from 2025 (this contribution)

14. February 2022 | Property tax in Lower Saxony from 2025

As in six other federal states, a new property tax according to their own rules will apply in Hamburg from 2025. In Hamburg, the so-called residential model was chosen. In this context, a 25 % reduction in the measured amount of real estate tax is envisaged if the real estate to be taxed is located in a residential location that is characterised as “normal” in the housing register of the Hanseatic city. In this way, Hamburg wants to prevent the land values, which are steadily rising in the Hanseatic city, from forming the tax base for property tax. Because this would make living in Hamburg excessively expensive. In addition, advantages are also provided for social housing and architectural monuments. In addition, Hamburg introduces a higher taxation of land ripe for construction but undeveloped as part of property tax C. With regard to the collection of property tax A for agricultural and forestry enterprises, Hamburg largely follows the provisions of the General Property Tax Act.

In April 2018, the Federal Constitutional Court issued a far-reaching ruling on property tax in Germany by declaring the assessment methodology unconstitutional. The legislature then had until the end of 2019 to reform the property tax law. The approach used was to calculate the soil guideline values. But there were other alternatives. Some federal states considered the latter the better choice. At least, from their point of view, other methods were more suitable for their circumstances.

Since many federal states were now willing to implement their own regulation on property tax rather than apply the federal model, they threatened to block the government’s draft law in the Federal Council. However, in order to comply with the judicial deadline, so that the municipalities could continue to levy a property tax from 2020 onwards, a compromise was agreed. An opening clause in the Basic Law should enable the federal states to enact their own property tax laws. This option is now also invoked by the Hanseatic City of Hamburg.

How exactly Hamburg now wants to raise the new property tax, we want to illuminate in this article.

To this end, we start with an analysis of the legal bases that will allow the Hanseatic City of Hamburg to collect property tax from 2025 onwards. This is primarily about the Hamburg Property Tax Act (HmbGrStG). The citizenship of the Hanseatic city adopted it on 24.08.2021. It entered into force on 1 September 2021.

The Hamburg Property Tax Act is divided into four parts, which extend over 13 paragraphs. The first part is devoted to property tax, which accrues on land. This therefore covers both property tax B and property tax C. Part 1 is divided into a first section on the assessment of property tax, a second section on the procedures to be followed for this purpose and a third section on rules on remission of property tax.

Part 2 of the Hamburg Property Tax Act applies to the property tax applicable to agricultural and forestry enterprises. However, § 9 HmbGrStG is completely sufficient for this.

Part 3 of the Hamburg Property Tax Act provides further details on the collection of property tax in Hamburg. § 10 HmbGrStG, which alone disputes this part of the law, only describes regulations that apply to property taxes in small amounts. For this purpose, different payment periods should apply.

With the final fourth part, however, we come back to fairways relevant for general taxation. The last §§ 11 to 13 HmbGrStG contain general provisions which include the application of federal law. This mainly means the general property tax law. This also applies to the tax code. However, statutory ordinances of the federal government with regard to the collection of property tax B and C should have no relevance, so that they only concern property tax A. This fourth part also contains transitional provisions and final provisions. Among them are the time regulations, which stipulate, among other things, that the new property tax should apply from 2025.

As in the other federal states, a three-stage procedure for collecting property tax is to be applied in Hamburg. The basis for the calculation of property tax B in Hamburg is the so-called housing model. For this purpose, an amount is first calculated which is based on the land area and on the usable area of buildings built on it. For each square meter of land area, an equivalence figure of EUR 0.04 is calculated. And for each square meter of building space, the calculation takes place with an equivalent number of EUR 0.50. This determines the equivalence amount for land and buildings separately. The equivalence amounts thus form the property tax values.

With the respective property tax value you go into the further evaluation. For this purpose, the respective basic control value is multiplied by the basic control measurement number specified for this purpose. § 4 HmbGrStG generally indicates the property tax measure with 100%. But there is a 30% reduction for residential buildings. In addition, the housing situation also plays a role in the calculation in relation to residential properties. For example, a normal residential location should be accompanied by a further reduction of 25%.

The classification of the residential location according to "normal" or "good" takes place in Hamburg on the basis of the rental level. The Hanseatic city provides corresponding information about this in its housing directory.

A further 25% reduction in the basic control metric is envisaged for certain cases. These include social housing and monuments. In this way, the property tax figure can fall to up to 29.5% (tax figure = 100% x 70% [apartment] x 75% [normal residential location] x 75% [social housing] x 75% [architectural monument]).

If these calculation operations have been performed for all relevant components of a plot, the sum of the resulting products is formed. This is then the real estate tax measurement amount, which the City of Hamburg sets in the third step when collecting the real estate tax on its lifting stock.

Hamburg is also implementing the idea of a higher property tax for undeveloped but ready-to-build properties. In this way, the city-state wants to counter speculation with building plots that could serve the urgently needed housing by increasing taxation. This refers to § 25 GrStG. But the height of the lifting set ultimately determines the Free and Hanseatic City of Hamburg itself.

Even if the Hanseatic City of Hamburg hardly boasts of extensive agriculture and forestry, corresponding regulations for the collection of property tax A are still contained in the Hamburg Property Tax Act. However, the only paragraph directly responsible for this (§ 9 HmbGrStG) refers only to regulations that deviate from the general property tax law and the other relevant federal laws. However, these are mostly insignificant exceptions. In this way, the Free and Hanseatic City of Hamburg also broadly follows the general requirements of the Property Tax Act with regard to Property Tax A.

In special hardship cases, a partial remission of property tax for commercial real estate in Hamburg should be possible on request. This is an exception that should apply if the amount of property tax is disproportionate to the municipal infrastructure provided for it. The decree is only foreseen for the share of the property tax measurement amount attributable to the building. If a large building area is associated with a comparatively low usability, then a partial remission should be considered. No remission of property tax is provided for the land itself.

After such a waiver takes effect, no new application is required in the subsequent assessment periods. However, there is an obligation for taxpayers to report this circumstance in the event of a change in the situation, so that the statutory provisions can be reapplied.

Finally, we come to our conclusion on the new property tax in Hamburg from 2025. First of all, we note that the housing model, which lays the basis for the valuation of the real estate to be taxed in the Hamburg Property Tax Act, certainly makes sense for the conditions there. In any case, it makes more sense than the application of the general federal model. Because in Hamburg two special features come together. On the one hand, it is a largely densely populated federal state. On the other hand, real estate prices in Hamburg, as in all major German cities, have risen enormously without an end to this development being discernible. As a result, the housing model of the Hanseatic City of Hamburg is able to keep housing affordable by decoupling the property tax from the steadily rising land standards.

However, this excludes taking into account the actual real estate values. Thus, property owners of high-quality properties may also benefit from this model. Whether a reduction of 25% in normal residential locations compared to good residential locations is sufficient to make a significant difference to these conditions, you can see how you want. After all, the property tax should also be revenue-neutral in Hamburg from 2025.

Remarkable about the situation in Hamburg is another aspect. Because the implementation of the procedure for collecting the property tax should take place in the programming network with Bavaria.

Since the main assessment, as in all other federal states, also takes place in Hamburg on 01.01.2022, the affected property owners and other taxpayers in this regard should soon familiarize themselves with the new legal situation. This includes, in particular, informing oneself about the request of the financial administration, which will in the near future justify the submission of a statement of assurance. It is currently planned that the statement of assessment should be submitted in the period 01.07.2022 to 31.10.2022.

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