Resident fees

Resident Contributions - Resident contributions (also known as road construction contributions or development contributions) are public-law levies that municipalities collect from property owners when a road or development facility in the vicinity of their property is constructed, expanded, or renovated for the first time. The legal basis is provided by the Building Code (Sections 127 et seq. BauGB) and municipal tax statutes.

Types and Assessment

A distinction is made between development contributions (for the initial construction of a road, § 127 BauGB) and road improvement contributions (for the renewal or improvement of existing roads, pursuant to the Municipal Tax Act). For development contributions, the municipality bears at least 10 percent of the costs itself; the remainder is borne by the residents on a pro-rata basis according to property area and floor area ratio.

The assessment is based on the so-called benefit principle: Properties that derive a greater benefit from the development (larger area, higher permitted building density) pay more. The specific contribution amount is determined by the municipality’s bylaws.

Cost range: For road renewal projects including sidewalks, lighting, and drainage, amounts ranging from 5,000 to 30,000 euros per property are not uncommon. The exact amount depends on the length of the property’s street frontage, the property area, and the portion of the project relevant to the contribution. Contributions are determined by official notice and are generally due within one month of delivery.

Development Contributions under the BauGB

Development contributions are levied for the initial construction of development infrastructure: roads, paths, squares, parking areas, green spaces, and drainage systems within the public road network. The municipality allocates 90 percent of the eligible costs to the adjacent properties; it bears the remaining 10 percent itself.

The development contribution arises upon the final construction of the facility (technical completion and dedication). However, the municipality can only set the contribution once a valid development statute is in place and the exact scope of costs has been determined. In some municipalities, years may pass after completion before the notices are sent out-which poses a hidden risk for buyers of existing properties.

Comparison of Typical Contribution Amounts

Measure	Legal Basis	Responsible Authority	Resident Share	Typical Cost/Property
Initial road construction	Sections 127-135 of the German Building Code (BauGB)	Municipality	up to 90%	€5,000-20,000
Sewer connection (initial development)	Bavarian Sewerage Act (KAG)	Municipality/special-purpose association	100%	€3,000-8,000
Road improvement (renovation)	KAG Bavaria until 2018	abolished in Bavaria	-	no longer applicable since 2018
Sidewalk (initial construction)	§ 127 BauGB	Municipality	up to 75%	€1,500-5,000
Lighting (part of development)	§ 127 BauGB	Municipality	up to 75%	€500-2,000
Green spaces (public)	§ 127(2) BauGB	Municipality	up to 50%	€200-1,000

Calculation example for a property in a new development area in Nuremberg: 600 m² property, floor area ratio (FAR) 0.4 (240 m² floor area). Contribution-liable share of road construction costs: €150,000 for the access road, distributed among 20 properties based on property area × FAR factor. Resulting contribution burden: approx. €12,000.

Tax Treatment

Resident contributions for initial development must be capitalized as incidental acquisition costs of the property and are not immediately deductible. They increase the tax value of the property but-since the land portion is not depreciable-are not to be included in the depreciation base. Only if the contribution is attributable to the building portion (rare) would inclusion in the depreciation base be considered.

Contributions for the renewal of existing infrastructure (road improvement contributions), on the other hand, may be deductible as income-related expenses for rented properties-either as an immediate deduction or spread over several years, depending on tax classification.

Practical Tip for Property Owners in Nuremberg

In Bavaria, recurring road construction contributions were abolished in 2018-municipalities are no longer permitted to levy construction contributions for existing roads. This is a significant advantage over other federal states where these contributions are still levied. Development contributions for the initial construction of roads in new development areas remain unaffected and continue to be levied.

We recommend that prospective buyers check with the relevant civil engineering office or building authority before purchasing a property to determine whether there are any outstanding contribution claims for adjacent roads and infrastructure. In Nuremberg and the surrounding area, such claims can still be levied years after completion if the municipality has not settled the accounts on time.

Frequently Asked Questions

Are road construction fees still permitted in Bavaria?

No, Bavaria has legally prohibited the collection of road construction fees for existing roads since 2018. The relevant provision in the Local Tax Act (KAG Bavaria) was amended accordingly. Development contributions for the initial construction of roads in new development areas are not affected by this and continue to be levied-including in Nuremberg, Erlangen, Fürth, and the surrounding rural municipalities.

Can I file an objection to a contribution notice?

Yes, an objection can be filed with the municipality within one month of delivery. Typical grounds for appeal include incorrect cost calculations, an inappropriate allocation formula, or the statute of limitations on the contribution claim. The Federal Constitutional Court has clarified that the collection of development contributions is not possible indefinitely-the claim expires after a reasonable period following the construction of the facility. In cases of significant discrepancies in the amount, we recommend seeking legal counsel.

Can I deduct resident contributions for tax purposes?

Resident contributions for initial development must be capitalized as incidental acquisition costs of the property and are not immediately deductible. For rented properties, they merely increase the acquisition cost basis but do not directly result in higher depreciation, as the land portion is not depreciable. Contributions for the renewal of existing facilities may be deductible for rented properties as maintenance expenses and thus as income-related expenses-the exact tax classification should be clarified with a tax advisor.

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