IVD calls for an end to the tax increase excess

property purchase

Since 2006, the federal states have been responsible for the amount of the real estate transfer tax.

(Photo: dpa)

Berlin In their coalition agreement, the SPD, Greens and FDP promise: “We want to enable more people in Germany to live in their own homes.” However, practical implementation is difficult. Because the federal states also have to go along with this – especially when it comes to real estate transfer tax.

The German Real Estate Association (IVD) is now calling on the traffic light government to stop the constant increases in the tax. “Since the federalism reform came into force in 2006, the real estate transfer tax has been increased 28 times across all federal states,” said IVD President Jürgen Michael Schick to the Handelsblatt. “This tax increase excess must be ended.”

The federal states of Brandenburg, North Rhine-Westphalia, Schleswig-Holstein, Thuringia and Saarland currently levy the highest real estate transfer tax of 6.5 percent. The tax base is the purchase price of the property. As prices continue to rise, there are high additional costs when buying real estate.

In the case of the maximum taxation for a real estate purchase in the amount of 500,000 euros, 32,500 euros in real estate transfer tax are due. Consumers are therefore finding it difficult to buy their own home.

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Since 2006, the federal states have been responsible for the amount of the real estate transfer tax. “This created the incentive for all states except Bavaria and Saxony to continuously increase the tax rate from the original 3.5 percent,” reported Schick. However, the income would not be fully credited and redistributed in the financial equalization of the federal states. “This means that those countries that have the highest tax rate benefit the most.”

IVD calls for a tax rate of 3.5 percent

Schick is therefore calling on the federal government to “eliminate this design flaw”. That means linking the financial equalization of the federal states to the actual tax revenue. In addition, the power to set the tax rate must be shifted back to the federal government through an amendment to the Basic Law. “From an IVD point of view, the tax rate must be lowered back to 3.5 percent,” said Schick.

In the coalition agreement, however, the SPD, Greens and FDP agreed to allow the federal states to make real estate transfer tax more flexible, for example through an exemption. This should make it easier to purchase owner-occupied housing.

For counter-financing, the traffic light wants to use the closing of tax loopholes when buying real estate from corporations, i.e. when taxing “share deals”.

Federal Building Minister Klara Geywitz (SPD) already appealed to the federal states in the “Tagesspiegel”: “It would be a great relief if the real estate transfer tax for the first owner-occupied property that someone buys was reduced.” Wanting to talk about making the real estate transfer tax more flexible.

Hamburg announces tax rate adjustment

IVD President Schick also calls for young families to waive the real estate transfer tax or at least to defer it if they would buy an aging single-family home in return and commit to energetically renovating the property. “In this way a private house would be renovated and young families would be helped to acquire property.”

This could, for example, be linked to certain income levels, “so that the millionaire’s villa on Lake Starnberg is not renovated with tax money,” explained the IVD President.

Hamburg had recently announced an adjustment to the tax rate. Here, the real estate transfer tax is to rise to 5.5 percent on January 1, 2023. At the same time, there would be a tax reduction for young families when buying a residential property for their own use for the first time, as well as for the purchase of land for the construction of social housing and leasehold land – assuming the flexibility promised by the federal government. In these areas, 3.5 percent real estate transfer tax will then be due in the future.

In the federal government, however, the previous government made up of Union and SPD had already promised a reform of the real estate transfer tax, but then did not implement the project.

More: What politicians promise in housing construction

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