Reform of Real Estate Tax

Tasks

The property tax, one of the most important sources of revenue for municipalities, is being reformed, which means that all properties will have to be revalued. This reform is not intended to be used by municipalities to increase their property tax revenues. Instead, the aim is to adjust the assessment rates so that revenues remain constant even if the valuation of all properties changes. Therefore, for each municipality in Saxony, the assessment rates for property tax A and B that would have to be set to keep the municipality's property tax revenue stable are to be determined. However, the survey of new property values has not yet been completed. For this reason, an estimation model is to be developed which, despite the incomplete data available, will be able to provide a forecast of the revenue-neutral assessment rate for each municipality in Saxony and create a reliable basis for decisions on the setting of the revenue-neutral assessment rate.

Methods

The first step is to calculate property tax revenue under the old law up to the year 2025, as this is the only basis for setting revenue-neutral assessment rates for the municipalities. The second step is to determine property tax revenues under the new law. In the third step, it is then possible to derive the respective assessment rates that would keep the property tax revenues of the municipalities stable.

Data and other sources

Vierteljährliche Kassenstatistik, State Statistical Office of Saxony, Analyses of the State Office for Taxes and Finances.