Germany's Complex Property Tax Reform Set to Reshape Costs in 2025

The new system, mandated after a court ruling, faces criticism for its uneven impact, delayed implementation, and potential legal challenges.

The Grundsteuer reform, effective January 2025, replaces outdated property valuation methods declared unconstitutional by Germany's Constitutional Court in 2018.
The new system introduces significant variability in tax burdens, with older properties in less desirable areas often seeing smaller increases than newer homes in prime locations.
Many municipalities have already raised tax rates, citing financial pressures, with average increases in Hebesätze (local tax multipliers) reaching record levels in 2023.
Millions of property owners have yet to receive their tax assessments, leading to widespread uncertainty and criticism of administrative inefficiencies.
Legal challenges against the reform are mounting, with claims that the new valuation methods may violate constitutional principles, potentially leading to further judicial review.