Just 90 kilometers as the crow flies lie between the front runner and the bottom of the property tax ranking, which was compiled by the employer-financed Institute of Economics (IW Cologne) on behalf of the property owners association Haus & Grund. While Witten in the Ruhr area asks its citizens to pay more than all other municipalities and charges 771 euros property tax for a standard single-family house, in East Westphalia Gutersloh with 323 euros not even half of it is due. The IW calculated the amount of property tax for an average single-family home in the 100 most populous German cities.
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After the trade tax, property tax is the most important source of income for cities and municipalities. It is also a somewhat peculiar plant in the lush German tax landscape. A federal requirement is initially used for the calculation. Because the “unit value” used here is ancient, there was criticism from the jurisprudence. The Federal Constitutional Court declared the property tax unconstitutional in 2018 and called for an amendment, which the legislature initiated after a tough struggle.
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When collecting taxes, the municipalities have their own leeway through so-called assessment rates. Some cities take advantage of this leeway to get money into their tight coffers. Other municipalities, on the other hand, keep the rate low and hope that this will make the city more attractive. The study deals with the so-called property tax B for real estate (the less well-known property tax A relates to agricultural land).
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The standard house for which the study values are quoted has 125 square meters of living space and a 500 square meter plot of land. A central finding of the study authors: The situation is very different – and in some places only difficult to understand. Düsseldorf – actually known as an expensive patch for real estate – for example, with 373 euros, it is 12th place in the ranking. Solingen on the other hand, which is only a stone’s throw away from the state capital of North Rhine-Westphalia, charges 585 euros and thus 212 euros more. In the list, the city comes in 86th place.
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There were also big differences in other cities that are not far from each other and have a lot of commuters. In Bonn it is 576 euros a year in Cologne 436 euros. In Offenbach it’s 758 euros and in Frankfurt am Main 424 Euros. In Berlin it is 686 euros, in Potsdam 462 euros (the full list can be found here).
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It is also noticeable that a number of large cities in North Rhine-Westphalia do poorly from the point of view of property owners. In the ranking, 16 cities in North Rhine-Westphalia – mainly from the Ruhr area – were among the 20 municipalities with the highest property tax. Also Mülheim an der Ruhr (754 Euro), Duisburg (724 euros) and Marl (669 euros) are relatively expensive. The reason: the cities have high debts, mainly due to the structural change in the Rhine-Ruhr area. They want to fill their tight coffers with taxes.
Twelve cities raised property taxes
Compared to an earlier study from 2018, twelve cities have raised their property taxes. In Offenbach the average property tax rose by half (49 percent) to 758 euros, in Mülheim by 38 percent (to 754 euros), in Gelsenkirchen by 24 percent (to 572 euros) and in Salzgitter (Lower Saxony) by 25 percent (to 458 euros).
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However, the trend was not consistently towards higher taxes. After all, three cities have lowered property taxes: Erlangen (Bayern), Remscheid and Leverkusen (both NRW).
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