By extending the deadline for submitting property tax returns, politicians responded to the slow progress being made with submissions. Now that the new year has begun, the deadline is fast approaching – and millions of property tax returns are still missing. How can this be explained? What do the first property tax assessment notices look like? When should an appeal be lodged? And what can be expected once the deadline has passed? We discussed these and other questions with property tax expert Guido Karmann on „hsp live at 11“.
Guido is a tax adviser at Husemann, Eickhoff, Salmen & Partner. There, he is responsible for matters relating to property tax. For the sake of transparency, it should be noted that Guido is Opti.Tax Land Tax is working and is very satisfied. The past few months have, at times, proved challenging even for this experienced professional. Host Paul Liese wants to know what Guido thinks of the deadline extension. The professional has mixed feelings about it. His property tax team consists of apprentices and students. Towards the end of the original deadline, he lost his key member of staff, as the colleague had exams to sit. In that respect, Guido was certainly glad of the deadline extension.
However, this also triggered a sort of ‘relaxation mode’ in some clients. Suddenly, it felt as though there was plenty of time again. As a result, many lost sight of their property tax obligations. Unsurprisingly, these clients are now under pressure. Consequently, Guido cannot guarantee one hundred per cent that the deadline will be met. He is also concerned about the enormous number of missing property tax returns. Guido believes it is possible that the deadline will be extended once again. In his original field of expertise, VAT, a deadline was even extended by nine years. He had not expected the first notices until the end of 2023 or later. Yet some property tax assessment notices have already arrived.
Should I lodge an appeal against my property tax assessment?
Paul would like to know how Guido and his team deal with the decisions. Guido begins by pointing out that absolute certainty can only be achieved once proceedings have reached the Constitutional Court. For this reason, an appeal is not lodged immediately against every decision. Guido only receives the notices for clients who have signed a power of attorney in advance. If no power of attorney has been provided, the notices are sent directly to the clients. Incoming notices are reviewed and then forwarded to the client. Guido also had to submit a property tax return himself, which he did relatively early on. His notice arrived in August 2022; he did not lodge an appeal.
What about subsequent assessments? Guido has found that the biggest source of errors – or rather, the most challenging area – is the ‘outer zone’. The ‘outer zone’ means there are three or four different standard land values. Clients then claim that the plots are worthless, as this is what the financing banks have told them. A look at the property tax portal then reveals several different figures. Tax offices tend to favour the highest value. For example, in one client’s case, Guido had declared the entire plot using the highest value. It later transpired that the cadastral classification was different. However, the deadline for lodging an objection had already passed. So Guido carried out a revaluation effective from 1 January 2023. Now we can only hope that this workaround works. Clients will soon be advised to get in touch if there are any changes to their properties.
Following the Council tax Other major issues arise
Paul wants to know whether Guido can see anything positive in the whole property tax issue. Guido points out that, as a result of the property tax reform, many clients have updated their databases for the first time in a long while. As an example, he cites estate agencies that have grown gradually over time. These were unable to provide up-to-date information on individual properties at the drop of a hat. Otherwise, however, Guido is happy to leave this matter behind. He is much more looking forward to tackling projects in his traditional area of expertise: VAT. The situation is similar at hsp. Whilst things are calming down on the property tax front, new projects aimed at eliminating data silos are being tackled. Work is currently underway with a Berlin-based law firm to launch the ‘digital emergency file’ initiative.
However, it is also true that the issue of property tax is not simply over. Millions of assessment notices are still outstanding. Furthermore, it is not yet clear how the property tax reform will be dealt with in the courts. Changes may occur over many years. The hsp will Opti.Tax Property Tax software solution and therefore continue to keep it up to date and develop it further on an ongoing basis.
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