Taxes on real estate: numerous queries, frustrations, and complaints aplenty
In North Rhine-Westphalia (NRW), Germany, the property tax reform is well underway, set to take effect from January 1, 2025. This reform is part of a broader effort to address budgetary pressures and involves adjustments such as fee increases for registry courts and ongoing legal clarifications related to property taxation, particularly concerning property transfers and taxable events.
One of the key ongoing issues is the legal disputes regarding the tax treatment of property transfers. For instance, a recent appeal at the Federal Fiscal Court questioned whether partial transfers by anticipated inheritance count as taxable sales. The debate centers around whether sales below historical acquisition costs indicate no actual increase in value and thus should be exempt from tax to avoid taxing fictitious income.
While the introduction of a new Commercial Court in Düsseldorf focusing on business law disputes, including property-related issues, is a significant development, it is more about business legal frameworks rather than direct property tax reform.
The property tax affects both commercial and residential properties, whether owned or rented. Notably, only half of the property tax declarations received by the finance departments could be processed automatically due to incompleteness, incorrectness, or implausibility. This has led to a backlog of cases, with over 1.5 million objections against property tax assessment notices.
The design of the property tax has been a topic of interest for specialists for decades, but it has recently become a national concern. Ralf Witzel, the spokesperson for budget and finance of the FDP parliamentary group, is demanding a revision of the property tax after the municipal elections in September. The North Rhine-Westphalia homeowners' association has also written about the fundamental problem of the property tax.
The number of inquiries about property tax is decreasing month by month, but the content of these inquiries is not statistically recorded. As of the second quarter of 2025, a total of 68,712 calls about property tax were received by the finance departments. By the end of June, there were 450 lawsuits against both assessment notices.
The question of whether the property tax reform is compatible with the Basic Law is repeatedly raised. The FDP advocates for a reform of the property tax system, but no specific contradictions or further unresolved policy issues about the reform's structure were found in the latest search results.
In conclusion, the property tax reform in NRW is an active area of development, with ongoing legal and procedural adjustments, fee increases planned to support registry operations, and judicial reviews clarifying tax liability issues connected to property transactions. Despite the challenges, the reform remains a significant concern for NRW's finance departments.
- The ongoing legal disputes regarding the tax treatment of property transfers and the question of whether the property tax reform is compatible with the Basic Law are significant economic and social policy issues that have recently become a national concern, with Ralf Witzel, the spokesperson for budget and finance of the FDP parliamentary group, demanding a revision of the property tax.
- The property tax reform in North Rhine-Westphalia, which includes fee increases for registry courts and ongoing legal clarifications related to property taxation, is not just about budgetary pressures but also extends to the business sector, as evidenced by the new Commercial Court in Düsseldorf focusing on business law disputes, including property-related issues.
