tax rate

The assessment rate is a multiplier set at the discretion of the municipality, which is used to extrapolate the tax base (property tax) or trade tax base determined by the tax office to the actual tax amount due. For property owners, the property tax assessment rate is particularly relevant: together with the tax base, it determines how much property tax they must pay annually. The assessment rate is a key municipal budgetary tool and varies significantly from municipality to municipality.

How does the assessment rate work for property tax?

Property tax is calculated in three steps:

1. Property tax value (determined by the tax office according to the new valuation law effective 2025)
2. Tax base = Property tax value × Tax assessment rate (in Bavaria according to the area model: fixed equivalence figures)
3. Property tax = Tax base × Municipal tax rate (as a percentage, e.g., 555%)

A tax rate of 555% means that the tax base is multiplied by a factor of 5.55. With a tax base of €100, this results in an annual property tax of €555.

Assessment Rate Differences and Their Significance for Real Estate Purchases

There are significant differences in assessment rates between cities and surrounding municipalities. Higher assessment rates mean higher ongoing costs for owners and tenants (since property tax is pass-through). For investors, the assessment rate is therefore a relevant factor in calculating profitability. In the Nuremberg metropolitan region, the assessment rates for Property Tax B (building land and residential buildings) range from around 350% in affordable surrounding municipalities to over 580% in certain cities.

Investors purchasing a multi-family home should calculate the annual property tax burden precisely. With a tax base of €500 and a tax rate of 555%, this results in an annual tax of €2,775. In a municipality with a 350% rate, it would be only €1,750-a difference of over €1,000 per year, which adds up to a significant amount over the entire holding period.

Property Tax A and Property Tax B

Not every assessment rate applies to all types of property. There are three types:

• Property Tax A: for agricultural and forestry operations
• Property Tax B: for building lots and developed properties - the relevant category for property owners
• Property Tax C (new, optional): allows municipalities to apply a higher assessment rate to plots that are ready for development but undeveloped, in order to curb speculation

Most municipalities set different assessment rates for A and B. Anyone purchasing a property must therefore know the correct assessment rate.

Trade Tax Assessment Rate - Relevant for Commercial Real Estate

When purchasing or managing commercial real estate, the municipality’s trade tax assessment rate is also significant. It influences the tax burden on tenants and thus indirectly affects the attractiveness of a location for businesses. High trade tax assessment rates can dampen demand for commercial space and limit rental prices. For companies seeking a business location, the trade tax assessment rate is an important decision-making criterion alongside location and infrastructure.

Practical Tip for Property Owners in Nuremberg and Franconia

The city of Nuremberg has set a property tax B assessment rate of 555% for 2025. By comparison: Erlangen is at 490%, Fürth at 580%, and many rural municipalities in Middle Franconia are below 400%. Anyone purchasing real estate in the region should factor the local assessment rate into their cost calculations. Upon request, we can check the current assessment rate and the ongoing property tax burden for each property-this is particularly relevant for investment properties when planning liquidity.

It is also worth taking a look at the respective municipality’s budget planning: experience shows that municipalities with a strained financial situation tend to raise the assessment rate more frequently. Regular changes should be factored into real estate planning. The Bavarian State Office for Statistics publishes an annual overview of all Bavarian municipalities and their assessment rates-a valuable tool for investors and property owners.

Frequently Asked Questions

Can the municipality increase the assessment rate at any time?

Yes, the municipality can adjust the assessment rate as part of its annual budget ordinance. Increases take effect starting with the respective fiscal year. In the past, many municipalities adjusted the assessment rate with the 2025 property tax reform; further adjustments are possible.

How can I find out the current assessment rate for my municipality?

The current assessment rate is published in the municipality’s budget ordinance and is usually available on the municipality’s website. The Bavarian State Office for Statistics also publishes an annual overview of the assessment rates for all Bavarian municipalities.

As a landlord, can I pass on the increased property tax to the tenant?

Yes, property tax is a recoverable operating cost (BetrKV). If the assessment rate-and thus the property tax-increases, landlords can pass on the additional cost to tenants via the utility bill-provided the lease agreement contains a corresponding clause. If this clause is missing, the landlord must bear the increase themselves.

Is there a statutory minimum or maximum limit for the assessment rate?

Section 25 of the Property Tax Act (GrStG) stipulates a minimum assessment rate of 200% for Property Tax B. There is no statutory maximum limit; in financially weak municipalities, there are isolated cases of assessment rates exceeding 900%-though not in Bavaria. However, the municipality is effectively limited by the principle of revenue neutrality and local self-government.

How does the assessment rate affect the calculation when purchasing a commercial property?

When acquiring a commercial property, the assessment rate is an important cost factor in the long-term operating budget. Since commercial tenants pass on property tax as part of operating costs in their overall cost calculations, a high assessment rate at a given location can affect tenants’ competitiveness and-if rates are very high-even cause tenants to prefer locations in more affordable surrounding municipalities. For investors, the higher the assessment rate, the more relevant the question of whether property tax is contractually passed on to tenants. If this agreement is missing from the commercial lease, the full tax burden remains with the owner.

Assessment Rate Comparison: Nuremberg Metropolitan Region and Surrounding Areas (2025)

In the Nuremberg metropolitan region, there are significant differences between urban and rural assessment rates. While the core cities of Nuremberg (555%), Fürth (580%), and Erlangen (490%) tend to have higher assessment rates, many surrounding municipalities are significantly lower. Municipalities such as Wendelstein (approx. 360%), Stein (approx. 400%), or Schwabach (approx. 390%) thus offer a noticeably lower ongoing property tax burden for space-intensive properties-single-family homes on large lots or commercial real estate. The Bavarian State Office for Statistics publishes an annual comprehensive overview of all assessment rates, which serves as a valuable planning tool for investors and property owners. When choosing between two comparable investment properties in different municipalities within the region, the assessment rate can result in a difference of several thousand euros over a 20-year holding period.

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