Property tax return missed?: What happens now after the deadline

By January 31, 2023, owners had to submit a property tax return for around 36 million plots of land and real estate.

Property tax return missed?: What happens now after the deadline

By January 31, 2023, owners had to submit a property tax return for around 36 million plots of land and real estate. Around a quarter of the declarations were still missing on the deadline. The tax consultant Michael Bormann comments on the consequences.

Mr. Bormann, what do I have to fear if I, as the owner of a property or piece of land, have not yet submitted my property tax return to the tax office?

Michael Bormann: Probably nothing in the short term. If taxpayers now submit their declaration to the responsible tax offices with a few days delay, they are likely to turn a blind eye. It is also possible to ask the responsible tax office for an individual extension of the deadline. However, it is by no means certain that this will be granted.

And long term?

In a first step, there should be a reminder from the Treasury, so to speak, a reminder. In addition, there is a risk of a late surcharge of 25 euros per month. It gets really expensive when the tax office imposes a fine. That can be up to 25,000 euros.

And what happens if someone still doesn't submit a property tax return?

Then the tax office will probably estimate the value of the property. The tendency here is to expect calculations that are too high rather than too low. The taxpayer then pays a missing tax return with unnecessarily high taxes to the tax office.

Is it conceivable that there will be an extension of the deadline? The deadline has already been pushed back from the end of October to the end of January.

In general, that would be possible. Bavaria has already extended the submission deadline by another three months. But I don't think the other federal states will follow suit. I rather expect that increasing pressure will be built up so that the explanations that are still missing come in a timely manner.

And what is your advice to taxpayers who have not yet delivered?

There is really nothing else you can do than to prepare the property tax return and submit it to the tax office. The legal situation is clear. And the quicker they do it, the better. This is the only way to avoid additional payments.

Should taxpayers do this themselves or use a tax advisor?

This is basically a matter of taste. Taxes aren't for everyone. But if you feel confident and have the time, you can of course prepare the property tax return yourself. The important thing is not to make any mistakes. Otherwise there is a risk of unnecessarily high tax payments. The crux is that different calculation methods apply depending on the federal state.

And what do you have to reckon with if a tax consultant is consulted?

According to my personal experience, the fees vary quite widely. In the case of single-family houses or apartment ownership, you can expect an average of around 300 to 500 euros per declaration.

When will the new property tax come into effect?

From the year 2025.

The majority of property tax returns are sent through the Elster input portal. This is not necessarily considered trivial. Are there other options?

In addition to Elster, there are a number of private portals that can be used to create and submit property tax returns. Providers include Wiso, Wolters Kluwer and Bundesanzeiger Verlag. Overall, they are considered more intuitive and easier to use than Elster. They cost money for that. And these portals are not completely trivial either. Some software has to be installed first. Elster access is also required, for example, for the online platform of the Bundesanzeiger Verlag.

The legislator has promised that no more real estate tax should be levied than in the past. Is this realistic?

Good question. I would be more skeptical about that. The solidarity surcharge has existed - with one interruption - since 1991/1992, although reunification should slowly be fully financed. And last year the Treasury received disproportionately high income from VAT due to inflation. Experience has shown that the state finds it very difficult to return money to its citizens.

dr Michael Bormann is a tax expert and has been a founding partner of bdp Bormann Demant since 1992

(This article was first published on Friday, March 03, 2023.)