Property tax reform – total chaos?
“Anyone who has been struggling for weeks should seek advice”
10/30/2022, 5:35 p.m
The property tax is being extended: the federal and state governments have agreed to extend the previous period by three months. The deadline for submission is now January 31, 2023 instead of October 31, 2022. “We are reacting to the fact that citizens need more time to submit their declarations,” said Doris Ahnen (SPD), Finance Minister of Rhineland-Palatinate and Chairwoman of the Conference of Finance Ministers Interview with Capital. In addition to owners, tax consultants also breathe a sigh of relief – although they would have liked an extension of six months, according to the President of the German Association of Tax Consultants, Torsten Lüth. Because the implementation of the reform continues to have a huge impact.
Mr. Lüth, the deadline for submitting property tax has been extended by three months – shouldn’t that be enough now?
Torsten Lüth: First of all, we are glad that something has changed with the deadline. Federal Finance Minister Christian Lindner recognized in the summer that there might be a need for this due to the many discrepancies. We are pleased that the federal states have now also agreed and have not blocked themselves. We tax consultants would have liked to have had an extension of six months because we have noticed certain imponderables in practice. It was clear early on that October 31 was too close. But if the taxpayers now have at least three months more time, then that is of course positive and to be welcomed.
If you have all the data together, it usually takes an afternoon for the property tax return. Aren’t you exaggerating?
If you want to value 36 million properties and all come to a tax consultant, then with around 90,000 active tax consultants in Germany, that would be 400 cases per consultant. In my state of Mecklenburg-Western Pomerania, it’s much, much worse. 1.2 million business entities have to be valued and there are around 750 tax consultants who would theoretically have four times as many cases on the table. It takes a while for our clients to collect all the documents. Certainly not all owners hire a tax consultant, but they still have to obtain the data. In some regions, we also had problems with standard land values for a long time, some of which were outdated or unavailable.
How big is the chaos in the implementation of the property tax reform?
Tax consultants have had a lot more to do since the corona pandemic. We applied for economic aid and settled an unbelievably large number of short-time work allowances and as a result had to neglect our day-to-day business at times. Now we are also busy with the property tax. No one could have guessed that these tasks would arise in such a concentrated manner, but the tax offices have been under tremendous pressure for the last two years. It is almost impossible to complete the property tax declarations within four months. The software that the law firms use for the declarations was only ready just before July 1st, when the Elster server also collapsed. Many law firms gave their clients checklists very early on, but some of these are only now coming back and being processed.
Most countries or tax offices have also informed …
Yes, and many have done that very well. But the countries have provided different information about their respective property tax models. From my point of view, this happened very late in many federal states, which was certainly also due to the human resources. As tax consultants, we see our responsibility for property tax and do our part. But we also see it as a common problem, we can only do it together with the tax authorities. It is all the nicer now that an extended period has been granted so that we can continuously process the declarations.
What questions do you hear from owners about property tax returns?
Not all of our clients are necessarily tech-savvy, which means that taxpayers who otherwise have little to do with tax returns also come to us. It is precisely with them that awareness-raising work is needed. They often want to know how much real estate tax they will later have to pay, but we can’t tell them that because the municipalities still have to determine the assessment rate. This then results in the amount to be paid. So we’re explaining that we’re doing a property tax assessment return and that’s not the number that’s going to be debited from your account later.
For whom is a tax consultant worthwhile? After all, it often costs several hundred euros.
Torsten Lüth, President of the German Association of Tax Advisors
(Photo: picture alliance / dpa / Steuerberaterverband MV)
Everyone has to decide for themselves whether to hire a tax advisor or to do the declaration themselves. The finance ministries of the federal states offer extensive information. The Federal Ministry of Finance has software that taxpayers can use to submit the declaration for a single-family home. But if I’m unsure, struggle with it for weeks and then still have a bad feeling, then I should rather seek advice. If I can confidently sift through my documents and deal with the tax terms I am confronted with, then I can do it on my own. It just has to be right, because false information can lead to a lot of additional costs. Then I pay too much property tax and maybe don’t even realize it.
Laura Eßlinger spoke to Torsten Lüth
The interview first appeared on Capital.de.