Property tax

Property tax is not a distinct tax term under German law, but rather a colloquial synonym for real estate tax-the municipal tax on the ownership of real property and agricultural and forestry assets. It is one of the oldest property taxes and is levied annually by municipalities. Following the property tax reform, which took effect nationwide in 2025, the basis for calculation and assessment rates have changed significantly in many municipalities.

Property Tax as the German Form of Real Estate Tax

Property tax is calculated based on the property tax assessment value (determined by the tax office) and the municipal assessment rate. Starting with the 2025 assessment year, the new valuation law based on the federal model or the state models applies-Bavaria has introduced its own area-based model. Under the Bavarian area-based model, the tax is calculated based on the land and building areas as well as an equivalence factor, regardless of the market value. Depending on the location and assessment rate, this can result in significant changes compared to the previous calculation.

Property Tax A applies to agricultural and forestry land; Property Tax B applies to developed and undeveloped properties (residential and commercial real estate). For residential properties in Nuremberg, only Property Tax B applies. Many federal states have additionally introduced the option of levying a Property Tax C on land ready for development but undeveloped-a tool against land speculation that has not yet been implemented across the board in Bavaria.

Assessment Rates and Tax Burden in Nuremberg

The City of Nuremberg independently sets the Property Tax B assessment rate for developed properties. The assessment rate is the multiplier applied to the property tax base-it can significantly influence the actual tax burden: municipalities with high financial needs apply higher assessment rates. In Nuremberg and many Bavarian cities, the assessment rates were adjusted as part of the 2025 property tax reform to achieve revenue-neutral results-which does not mean, however, that the tax has remained the same for every individual property owner.

Landlords may pass on the property tax to tenants as operating costs (Section 2 of the Operating Costs Regulation), provided this is agreed upon in the lease agreement. For owner-occupiers, however, property tax is not tax-deductible-it is classified as a non-deductible private living expense. For commercial properties, property tax is generally deductible as a business expense.

Appealing a Property Tax Assessment

With the 2025 property tax reform, many new assessments have been issued nationwide, and it is not uncommon for them to contain errors. Common sources of error include: incorrectly reported property areas, incorrect building areas (living space instead of gross floor area or vice versa), incorrect use classification, or missing basement and ancillary areas. Owners have the right to file an appeal within one month of notification of the assessment notice. Those who miss this deadline generally cannot have the notice amended. We recommend carefully reviewing every new property tax assessment notice.

Practical Tip for Property Owners in Nuremberg and Franconia

With the 2025 property tax reform, many property owners in Nuremberg and the metropolitan region have received new property tax assessment notices with different amounts. We recommend carefully reviewing the new notice: Are the land area, building area, and type of use correct? Errors in the assessment declaration, which forms the basis for the notice, can be corrected-but only within the one-month appeal period starting from the date the notice is issued by the relevant tax office.

When purchasing real estate in the Nuremberg area, buyers should note that the current property tax notice is based on the previous year’s assessment rate. The municipality can adjust the assessment rate annually-an increase of 50 to 100 assessment points can quickly result in an additional annual burden of 500 to 2,000 euros for a larger apartment building. A range of possible assessment rate developments should therefore be factored into investment calculations.

Frequently Asked Questions

Is property tax the same as real estate tax?

In Germany, yes. The term “property tax” is not codified in German tax law; it is colloquially used as a synonym for real estate tax, which is regulated by the Real Estate Tax Act (GrStG). In Austria, however, there is a separately regulated property tax with different calculation bases.

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

Yes. According to the Operating Costs Ordinance (BetrKV), property tax is a recoverable operating cost, provided this is expressly agreed upon in the lease agreement. The annual statement must show the actual property tax incurred. If the municipality increases the assessment rate after the lease agreement has been concluded, the increased property tax may still be passed on to the tenant-the agreement in the lease agreement covers future changes to the actual tax burden.

What happens if I don’t pay the property tax?

Property tax is a municipal tax; in the event of non-payment, the municipality may issue an enforcement order and, in extreme cases, have a security mortgage entered in the land register. It is always advisable to file an objection to the assessment rather than simply refusing to pay. Late payment penalties accrue starting from the first day after the due date. The due dates for property tax in Bavaria are: February 15, May 15, August 15, November 15.

How does property tax affect the purchase price of a property?

Not directly at all-the purchase price is a market variable. Indirectly, however, a high property tax rate affects the return on a rented property: When calculating a return on investment, a buyer must factor in property tax as an operating cost. In municipalities with very high assessment rates (over 500 points), property tax can significantly reduce the net return and lower the purchase price that a rational investor is willing to pay accordingly.

Is there an exemption from property tax?

Certain properties are exempt from property tax: Properties used exclusively for public purposes (e.g., schools, churches, community centers) may be exempt from the tax. Non-profit organizations may also apply for exemptions under certain conditions. In Germany, there is no general exemption for private owners; even residential properties designated as historic landmarks are not exempt from property tax, even if the renovation costs qualify for tax benefits. In Bavaria, the tax exemption must be applied for at the relevant tax office and requires proof of the eligible use.

Property Tax in Austria: A Comparison

Since the term “property tax” has a distinct meaning in Austria, a brief comparison is informative for owners and investors active across borders. In Austria, no property tax is levied in the German sense; instead, there is a real estate transfer tax (3.5% of the purchase price) as well as an annual property tax based on the unit value principle with a per mille rate-the overall burden is significantly lower than in major German cities. For owners in the Nuremberg metropolitan region who also hold Austrian real estate, this difference is relevant when calculating management costs. The my-home.de portal team recommends consulting a tax advisor with expertise in both countries for cross-border portfolios.

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