Hamburg's Real Estate Tax Reform: A Closer Look
Hamburg's Real Estate Tax Generates Approximately Revenue Equal to Expenditures - Approximately income-balanced tax on property in Hamburg
In Hamburg, the real game of property taxes is all about balancing the scales. According to the latest figures from the tax authority, approximately half the property owners will see a decrease in their real estate tax burden, while the other half will face an increase, with a near 33% bracket registering a more than 50% hike.
The Hamburg Abendblatt was the first to break this news. The city's aim for revenue neutrality in the tax reform seems on track, though it may slightly miss its target of generating 510 million euros per year from real estate taxes A (agricultural) and B (residential). The anticipated boost from the new real estate tax C for undeveloped land could help offset this shortfall.
Finance Senator Andreas Dressel (SPD) shared, "We've got around 410,000 cases under consideration, and we can see that about 50% will find the change less burdensome, and the remaining 50% will see an increase." He continued, "The extreme shifts both down and up are less than 10%."
While a third of taxpayers will shoulder a tax increase exceeding 50%, around 9% will see a rise of no more than 50%. It's essential to note that these figures are tentative, as objections, hardship applications, and corrections still need to be accounted for, according to Dressel.
It's crucial to consider the broader context of real estate taxes in Germany. For example, the speculation tax applies to properties sold within ten years of purchase, but primary residences can be exempted if lived in for three consecutive years, even during temporary rentals. Income tax brackets also influence speculation tax calculation, with rates ranging from 0% to 42%.
Depreciation laws for rental properties offer investors flexibility in choosing between linear or degressive methods. From 2023, new buildings will be depreciated linearly at a 3% rate over approximately 33 years. Special depreciation rules apply to energy-efficient buildings.
Other tax reforms include an increased minimum trade tax rate to combat tax avoidance and a permanent reduction in the VAT rate on meals in restaurants, effective from January 1, 2026.
Individuals benefiting from the speculation tax exemption for primary residences, investors gaining from depreciation rules for energy-efficient properties, and businesses contributing to fair competition through the increased trade tax rate—these are the stories unfolding in the world of German real estate taxes. Stay tuned for more updates on Hamburg's real estate tax reform in the coming weeks.
- The employment policies in Hamburg, as well as other aspects, are under close scrutiny due to the anticipated changes in real estate taxes.
- The various employment policies in place might be impacted by the increase in taxes, potentially leading to a reevaluation of financial investments in business and real-estate.
- It is likely that the community policy may need to address the potential consequences of increased taxes on individual's financial situations, such as their ability to secure employment.
- In light of Hamburg's tax reform, it is crucial to review the employment policy proportion that is allocated towards supporting taxpayers who might face a tax burden increase, particularly those experiencing a more than 50% hike.
- The employment policy should also consider investing in industries or job sectors that are likely to see growth due to the anticipated boost from the new real estate tax C for undeveloped land.
