Germany's New Property Tax System Sparks Concerns Over Rising Costs

The 2025 property tax reform, aimed at addressing inequities, has led to significant cost increases for many homeowners and renters.

The property tax reform, effective January 2025, replaces an outdated system deemed unconstitutional by Germany's Federal Constitutional Court in 2018.
The reform recalibrates tax calculations to address disparities, but many homeowners face sharp increases, with some seeing hikes of up to 996%.
While 36.5% of property owners will see reduced taxes, over 60% are expected to experience higher costs, raising affordability concerns.
Municipalities retain the ability to adjust local tax rates (Hebesätze), but some have not finalized rates, causing uncertainty for property owners.
Critics argue the reform disproportionately burdens homeowners and renters, with warnings that it may exacerbate housing cost pressures in an already strained market.