Post-land tax revision, Bremen's financial reserves diminish by 3.5 million euros
In the heart of northern Germany, the city of Bremen has embarked on a significant property tax reform aimed at updating valuation methods and addressing criticisms raised by the Federal Constitutional Court. The reform, which affects both residential and commercial properties, is expected to have an impact on property tax liabilities and revenue streams for the city.
The new property tax reform requires the revaluation of over 237,000 properties, including 35,000 in Bremerhaven. The criteria for property valuation now include factors such as the type of property, age of the building, living space, standardized rental value, size of the property, and location. Properties in desirable locations are likely to have significantly higher land values than those in less favorable areas or neighborhoods.
Initially, the valuation criteria were quite vague, causing confusion among property owners, landlords, and tenants. However, numerous objections have been raised against the new property tax assessments and measurement figures in Bremen, including around 47,900 objections against property tax value notices. The Bremen Senate has adjusted the statutory tax rates in favor of residential properties to keep their share in the total property tax revenue at 53%.
The potential rent increase of up to 10% for new tenancies would have been counteracted by an increase in ancillary costs, not rent. Despite the city of Bremen's assurance that it would not collect more property tax than before the reform, it remains uncertain whether the total amount will indeed be significantly lower than the previous figures. All assessments and any appeals still need to be processed to determine the final property tax amounts.
Further revenues from property taxes are expected throughout the year, as the amount for all properties has not yet been finally determined. By the end of June 2024, the Bremen tax authority had collected over 82 million euros in property taxes, which is 3.5 million euros less than the previous year.
The property tax reform aims to address the criticisms raised by the Federal Constitutional Court regarding the use of outdated value ratios. The previous basis for property tax calculations were outdated value ratios from 1964 and even 1935 in some new federal states. The analysis by the Bremen tax administration predicted a significant increase in the burden on residential properties due to the new property location criterion.
For detailed information and submission requirements, Bremen has an official portal on property tax reform: www.grundsteuer.bremen.de and related finance department resources. The reform's focus on updated valuation implies significant administrative and financial effects on both taxpayers and local government revenue streams.
Starting from 2025, the tax rate for property tax B (both built-up and unbuilt properties) will be 755% for the city of Bremen and 896% for the city of Bremerhaven. The reform's full impact on residential properties in Bremen and Bremerhaven is yet to be seen, but it is clear that this significant adjustment has significantly relieved the residential properties in these cities.
- The property tax reform in Bremen, influenced by general-news and politics, addresses criticisms from the Federal Constitutional Court by updating valuation methods, particularly in relation to property location.
- The finance department resources in Bremen provide detailed information on the property tax reform, which is expected to have significant administrative and financial effects on both taxpayers and local government revenue streams within the industry and business sectors.
- Starting from 2025, the property tax reform will institute a new tax rate for property tax B in both Bremen and Bremerhaven, aiming to improve the financial conditions of residential properties, impacting the overall finance and business landscape of the cities.
