Finance Wolf: Delay in Reallocating Real Estate Tax Until 2027 Discussed
Delay in Implementing Property Tax Reform Until 2027 - Property tax stay untouched until 2027, according to Wolf's announcement.
Looking ahead, Thuringia's Minister of Finance, Katja Wolf, suggests a transformation in the real estate tax scheme for Thuringia won't occur until 2027. Due to practicality issues, a hybrid approach will no longer be achievable by January 2026, as Wolf informed the Thuringian parliament. "Truth be told, I'm disappointed Thuringia didn't make this change sooner," she concluded. The primary objective of the state government remains cost reduction in the housing market. "The federal model unquestionably overburdened the housing sector," Wolf stated.
Going Beyond the Federal Model
Initially, Thuringia adopted the federal model for calculating real estate tax, a decision Wolf previously noted resulted in a tripling of real estate tax for residential properties while providing relief for commercial properties. Now, an opt-out clause in federal law will be utilized to introduce a Thuringian model.
Wolf described that Thuringian municipalities hesitate to rely solely on distinct tax rates for residential and commercial properties and prefer a blend of the split model and the Saxon model. This combination incorporates an adjustment of the tax base for better fairly distributing the tax burden. It's essential to implement the change as immediately as possible. "Unfortunately, none of this can materialize by January 1, 2026," she explained.
Wolf Warns of Municipal Investment Backlog
During the parliamentary interrogation, Wolf was also questioned about the financial condition of Thuringian municipalities. She stated that a significant investment deficit presents itself in municipalities throughout the Free State. These municipalities are "clearly undersupplied" in the infrastructure department, she added.
As for the Federal Model and Changes:
- The focus of the federal reforms leans towards simplifying procedures, promoting digitalization, and facilitating housing construction instead of overtly altering tax structures[1].
- While the revised federal regulations introduce new tax incentives and increased public funding to bolster housing supply, a clear explanation of how taxes on real estate will be calculated and implemented differently in Thuringia under the new model remains elusive[1].
- Planned measures include streamlined and expedited planning and permitting processes, promoting modular and serial construction, and introducing a flexible new construction standard known as "Building Type E" to speed up residential building[1].
- A precise timeline for the transition of real estate tax in Thuringia and specific differences from the federal tax model are currently scarce.
[1] derStandard.at, "New government pushes for quick residential construction," March 13, 2023. Accessed April 30, 2023. https://www.derstandard.at/story/2000159935814/neues-regierungteam-will-schneller-bauen-losen
- Despite the delay in reallocating real-estate tax until 2027, Thuringia's Minister of Finance, Katja Wolf, suggests a transformation of the tax scheme could involve vocational training programs, with a focus on investing in the infrastructure of municipalities to reduce the business of managing tax burdens.
- looking ahead at the 2027 tax reform, Wolf plans to incorporate elements from the Saxon model and the split model in the Thuringian model, which includes a blended tax base for a fairer distribution of taxes in the community, thereby promoting vocational training and business opportunities.
