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Germany Property Tax Guide (Grundsteuer 2026)

Grundsteuer is Germany's annual property tax, calculated as Grundsteuerwert × Steuermesszahl × Hebesatz (local multiplier). The Grundsteuerreform of 2025 replaced the outdated Einheitswert system with a new valuation method. Hebesätze vary by municipality from 200%–900%. Additionally, Grunderwerbsteuer (real estate transfer tax) of 3.5%–6.5% applies when buying property.

Every property owner in Germany pays Grundsteuer annually to the municipality (Gemeinde). The 2025 reform was mandated by the Federal Constitutional Court, which ruled the old Einheitswert (1964 values in West Germany, 1935 in East Germany) unconstitutional. The new system uses Grundsteuerwert (property tax value) based on current market data. For related reading, see our Real Estate Transfer Tax Guide → and Property Investment Guide →.

How Grundsteuer Is Calculated

• Grundsteuerwert (property tax value): The new valuation, determined by the Finanzamt based on the property's size, location, and usage. For rental residential properties, this is roughly the gross rental capitalisation value. For owner-occupied homes, it is based on comparable values.
• Steuermesszahl (tax assessment number): A federal rate applied to the Grundsteuerwert. For residential properties, the rate is 0.31‰ (0.031%). For non-residential (commercial), it is 0.34‰. Agricultural land uses 0.55‰. These rates may vary slightly under state-specific models.
• Hebesatz (local multiplier): Set by each municipality, typically 200%–900%. Large cities tend to have higher rates: Berlin ~810%, Munich ~535%, Hamburg ~450%, Cologne ~515%. The Hebesatz is multiplied by the Grundsteuermessbetrag (the product of Grundsteuerwert × Steuermesszahl) to determine your annual tax.
• Example: A property with a Grundsteuerwert of €300,000 × 0.31‰ = €93 (Steuermessbetrag). With a Hebesatz of 500%, annual Grundsteuer = €93 × 5.0 = €465.

State-Specific Models (Ländermodelle)

• Federal model (Bundesmodell): Used by most states. Based on Grundsteuerwert (property value derived from rental capitalisation) × Steuermesszahl × Hebesatz.
• Bavaria (Flächenmodell): Uses only land area and building area — no property value. The formula is area × Äquivalenzzahl × Hebesatz. Simpler but can lead to different tax burdens than the federal model.
• Baden-Württemberg: Also uses a pure area-based model. Land area × 0.04 €/m² + building area × 0.50 €/m², multiplied by the Hebesatz. No value element at all.
• Hesse, Lower Saxony, and others: Hesse uses a modified value model. Lower Saxony uses the federal model. Each state decided independently; check your local Finanzamt for the exact rules.
• Grunderwerbsteuer (transfer tax): Paid once when buying property. Rates: Bavaria/Saxony 3.5%, Hamburg 4.5%, NRW/Saarland 6.5%, most others 5%–6.5%. The buyer pays this tax on the purchase price.