Yes, Germany has a property tax. It’s called Grundsteuer, it’s billed annually by the municipality where the property sits, and every landowner pays it. A separate one-time transfer tax, Grunderwerbsteuer, applies when you buy. A major reform took effect on January 1, 2025, requiring fresh valuations for roughly 36 million properties and changing what many owners owe.1Germany Trade & Invest. Taxation of Real Estate
Grundsteuer comes in three variants: A for agricultural and forestry land, B for residential and commercial property, and C, added in 2025, which lets municipalities charge a higher rate on undeveloped buildable plots to discourage speculation. If you own a home, apartment, or ordinary investment property, Grundsteuer B is the one that applies.1Germany Trade & Invest. Taxation of Real Estate
How the Annual Tax Is Calculated
Most states use the federal three-step formula.1Germany Trade & Invest. Taxation of Real Estate First, the tax office sets an assessed value (Grundsteuerwert) using current market data, size, building age, and location.2Finanzämter Baden-Württemberg. Information for Owners Second, that value is multiplied by a small statutory rate (Steuermesszahl): about 0.031% for residential property, 0.034% for undeveloped land and commercial buildings. Third, each municipality applies its own multiplier (Hebesatz), expressed as a percentage.
A worked example. Take a home assessed at €300,000. Multiplied by 0.031%, the base assessment is €93. A Hebesatz of 400% brings the annual bill to €372. Bump the Hebesatz to 700%, which is not unusual in a large city, and the same home owes €651. The local multiplier is the single biggest variable in your bill.
States That Do It Differently
Five states designed entirely separate calculation systems, and two more kept the federal structure but changed the statutory rate.1Germany Trade & Invest. Taxation of Real Estate
Bavaria ignores property value. It taxes physical size: €0.04 per square meter of land plus €0.50 per square meter of building floor space, with a 30% discount for residential floor space. The Hebesatz is then applied to that combined figure. Location desirability does not directly factor in.
Baden-Württemberg goes the other way and looks only at land, not buildings. Your area is multiplied by the official standard land value for the neighborhood, then by the municipal multiplier.3City of Stuttgart. Standard Land Values with Information on Property Tax B If the standard land value overstates your actual value by more than 30%, you can submit a professional appraisal to argue for a lower assessment.
Hamburg, Hessen, and Niedersachsen have their own variants. Saarland and Saxony follow the federal formula with different statutory rates. If your property is in any of these states, check your municipal tax office’s guidance for the specific formula.
Who Pays It
The owner is legally responsible for paying Grundsteuer to the municipality, developed land or vacant.4Bundesportal. Property Tax; Receipt of the Property Tax Assessment and Payment to the Municipality
Landlords can pass the cost through to tenants, but only if the lease explicitly includes Grundsteuer in the operating costs (Nebenkosten). Without that clause, you can’t add it later. And even when tenants reimburse you, the municipality’s claim is against you as the owner. If a tenant pays you and the payment never reaches the city, the city comes after you.
If you rent the property out and pay the Grundsteuer yourself, it’s deductible as an income-related expense against your rental income on your German return, alongside repairs, insurance, property management fees, and travel connected to managing the rental.
When It’s Due
Your municipality issues an assessment notice (Grundsteuerbescheid) with the annual amount. Payment comes in four quarterly installments, each one-quarter of the total:5Hessian Portal for Administrative Services. Receive Property Tax Assessment for Land
- February 15
- May 15
- August 15
- November 15
You can pay by bank transfer or set up a direct debit. Some municipalities will accept a single annual payment early in the year if you request that arrangement in advance.
If Your Assessment Looks Wrong
You have one month from the date of the assessment notice to file a written objection (Einspruch) with the tax office. A bare objection preserves the deadline; you can add supporting evidence later. Filing does not pause your payment obligation. You still owe the tax on the normal schedule unless you separately request a suspension of enforcement. If the tax office rejects your objection, you have another month to bring the case before the tax court.
Given the sheer number of fresh valuations issued under the 2025 reform, errors are more likely than usual, and it’s worth checking the notice against what the tax office was supposed to use: your actual land area, building type, and location data.
The One-Time Tax When You Buy
Buying real estate in Germany triggers a separate real estate transfer tax (Grunderwerbsteuer). The buyer pays, and the rate depends on the state, ranging from 3.5% to 6.5% of the purchase price.1Germany Trade & Invest. Taxation of Real Estate
- 3.5%: Bavaria
- 5.0%: Baden-Württemberg, Niedersachsen, Rhineland-Palatinate, Saxony-Anhalt, Thuringia
- 5.5%: Bremen, Hamburg, Saxony
- 6.0%: Berlin, Hessen, Mecklenburg-Vorpommern
- 6.5%: Brandenburg, North Rhine-Westphalia, Saarland, Schleswig-Holstein
On a €400,000 home in North Rhine-Westphalia, the transfer tax is €26,000. The same purchase in Bavaria costs €14,000. That gap can decide whether a deal pencils out.
The tax office issues the assessment shortly after the purchase contract is notarized, and payment is generally due within about four weeks. The land registry will not record the ownership transfer until the transfer tax is paid, so the sale effectively cannot close without it. Some transfers are exempt, including property passed between spouses, between parents and children, and through inheritance.
Rental Income Is Taxed Separately
Grundsteuer is not the tax you pay on money the property earns. If you rent out German real estate, the rental income is subject to Germany’s progressive income tax whether you live in Germany or not. Rates start at 14% above the basic tax-free allowance of €12,348 (for 2026), climb to 42% at around €69,879, and reach 45% above €277,825. A 5.5% solidarity surcharge applies on top of the income tax.
Non-residents generally don’t get the basic tax-free allowance, so German rental income is taxable from the first euro unless at least 90% of your worldwide income comes from Germany. Anyone earning rental income from German property has to file a German tax return, regardless of where they live.