Property Tax A/B/C

Property Tax A/B/C - Property tax is an annual local tax levied on domestic real estate, which is set independently by each municipality and affects both owners and, indirectly, tenants.

How does property tax work, and what types are there?

Property tax is divided into three categories. Property Tax A covers agricultural and forestry land-that is, farmland, pasture, forests, and associated farmsteads. Property Tax B applies to all other developed and undeveloped properties, including residential buildings, commercial properties, and other private land. Effective January 1, 2025, Property Tax C has been added: It allows municipalities to apply an increased assessment rate to undeveloped land ready for construction in order to create a tax incentive for development and prevent land hoarding.

Property tax is calculated in three steps. First, the tax office determines the property tax value (since the reform, based on the federal model or a state model). This value is multiplied by the legally defined tax assessment rate, resulting in the property tax assessment amount. Finally, the municipality applies its individual assessment rate to the assessment amount-only then is the actual property tax due determined. Since each municipality sets its own assessment rate, the tax burden varies significantly from place to place even for identical property tax values.

The 2025 property tax reform reorganized the tax base nationwide. The goal was to replace the unit values, which had been outdated for decades, with modern property tax values. Bavaria applies its own area-based model, which takes into account only the land and building area-the actual market value plays no role here. For property owners, this means: The property tax assessment consists of the tax office’s property tax value notice, the property tax assessment notice, and the municipality’s property tax notice. We recommend carefully reviewing all three notices, as errors in the calculation of the property tax value carry over throughout the entire process.

Passability to Tenants

Property tax is classified as a passable operating cost under the Operating Costs Ordinance (Section 2 No. 1 BetrKV). Landlords may therefore pass it on to their tenants as part of the utility bill, provided this is validly agreed upon in the lease agreement. For tenants, this means: Property tax appears as a separate item in the annual operating cost statement. If the municipality’s assessment rate increases, the utility costs also rise. Owners who use their property themselves bear the full cost of property tax. Please note that property tax is due regardless of whether the property is actually occupied-the obligation to pay remains even if the property is vacant.

Practical Tip for Property Owners in Nuremberg and Franconia

The City of Nuremberg has adjusted the assessment rate for Property Tax B as part of the reform to make the transition as revenue-neutral as possible. Nevertheless, there are significant shifts for some individual properties-depending on location, lot size, and building type, the new property tax may be higher or lower than before. Especially in sought-after residential areas such as Erlenstegen, Mögeldorf, or the Südstadt, it is worth taking a close look at the new assessment notice.

Surrounding municipalities in the metropolitan region-such as Fürth, Erlangen, or Schwabach-also set their own assessment rates, so a comparison can be useful when making purchase decisions. We help our clients realistically assess the tax burden of a property and factor it into the overall calculation.

Frequently Asked Questions

When is property tax due?

Property tax is generally due quarterly on February 15, May 15, August 15, and November 15. Alternatively, owners can apply to the municipality to pay the annual amount in a single lump sum by July 1. The obligation to pay always falls on the owner listed in the land registry-in the event of a change of ownership, the obligation is transferred to the new owner only as of the following calendar year.

What is the difference between property tax and real estate transfer tax?

Property tax is a recurring annual tax on the ownership of real estate. Real estate transfer tax, on the other hand, is a one-time tax levied upon the purchase of a property and amounts to 3.5 percent of the purchase price in Bavaria. Both taxes are independent of each other and are collected by different authorities: property tax by the municipality, real estate transfer tax by the tax office.

What does the new Property Tax C mean for undeveloped land?

Starting in 2025, Property Tax C allows municipalities to tax undeveloped, buildable land at a higher assessment rate than developed land. The goal is to encourage owners to develop their land and to mobilize vacant land in tight housing markets. Whether a municipality makes use of this option and to what extent is decided by the respective municipal council. Owners of undeveloped land in the Nuremberg metropolitan region should closely monitor municipal decisions.

Can property tax be contested or reduced?

Yes, the property tax assessment and the preceding property tax value assessment can be contested with the tax office within one month of notification. Common sources of error include incorrectly recorded building areas, incorrect property sizes, or an inaccurate assignment to a property tax class. Anyone who believes that the determined property tax value does not reflect actual market conditions can request corrections as part of the appeal process. In Bavaria, the area-based calculation in the state model has a different effect than in the federal model: Since it is not the market value but solely the area and use that count, sources of error are primarily to be found in the area measurement. We recommend that property owners in Nuremberg compare their property tax assessment notices with the actual land registry and cadastral records before the appeal deadline expires.

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