Property tax 2025: what the new assessment notices mean for service charges

Since 1 January 2025, property tax has been levied under the new law (§ 37 GrStG). Most owners have now received their new assessment notices from the municipality, and the first instalment fell due on 15 February. Further instalments follow on 15 May, 15 August and 15 November (§ 28 GrStG). For landlords and property managers, the question is how the changed amounts are included in the service charges.

Property tax can still be passed on

The reform has not changed the passing on of costs itself. Under § 2 Nr. 1 of the Operating Costs Ordinance (Betriebskostenverordnung), property tax is one of the recurring public charges on the property. As before, the condition is that the tenancy agreement validly provides for service charges to be passed on. Unless another allocation key has been agreed, costs are allocated by floor area (§ 556a Abs. 1 BGB).

How high the tax is depends on the federal state. Most states apply the federal model. Baden-Württemberg, Bavaria, Hamburg, Hesse and Lower Saxony have introduced their own models; Bavaria, for example, has a pure area-based model. Each municipality sets its own multiplier (§ 25 GrStG). Depending on location and building, the tax may therefore rise or fall significantly.

Adjusting advance payments

If property tax rises noticeably, the previous advance payments are often no longer sufficient. Under § 560 Abs. 4 BGB, either party to the contract may adjust the advance payments to an appropriate level after a statement has been issued, by declaration in text form. The law does not provide for an adjustment solely on the basis of the new assessment notice without a prior statement. For many landlords, the first opportunity is therefore the statement for 2024 or, depending on the billing period, for 2025. Conversely, if property tax falls, the tenant can reduce the advance payments after the statement.

The statement for the 2025 calendar year must reach the tenant by 31 December 2026 (§ 556 Abs. 3 BGB). If an assessment notice or amended notice only arrives after that, a back-payment can only be claimed if the landlord is not responsible for the delay. The courts expect the landlord to claim the back-payment promptly in that case.

Special rules for owner-occupied flats

For property tax purposes, each flat in a condominium forms a separate economic unit (§ 244 BewG). The assessment notice is sent to the individual owner, not to the owners' association. Property tax therefore does not appear in the WEG's annual statement. The owner who lets the flat must include it in their own service charge statement. For rental management firms, it is worth requesting the new assessment notices for all flats and storing them in the master data before the next statement is prepared.