What Property Owners in Munich Need to Know About the 2025 Property Tax Reform

Starting January 1, 2025, a new regulation for property tax will apply nationwide, with its own unique set of rules for Bavaria. Property owners in Munich should therefore address these changes early on, partly because significant deviations from the previous tax burden will arise depending on the location, plot size, and usage. You can find out what is specifically changing and which steps are important now in this article.

Bavaria is forging its own path in the calculation

While most federal states apply the so-called federal model, Bavaria has introduced its own area-based model. Here in this state, evaluations are no longer based on the standard land value or location, but instead purely on area, meaning the size of the plot and the living or usable space of the property. For the calculation uniform state-wide values apply, namely 0.04 euros per square meter of land and 0.50 euros per square meter of building area. However, a 30 percent discount is granted on living space, which reduces the actual rate to 0.35 euros per square meter. Compared to the federal model, the procedure appears simpler at first glance, but yields surprising results depending on the type of property.

In Munich, plot sizes are decisive

In the Munich urban area, many plots of land are small due to extremely high land prices, whereas the living spaces are in places above average in size. This has an impact on the Calculation of the new property tax, because the plot area and living space are relevant for the tax. This leads to more complex calculation steps, particularly in the case of semi-detached houses or multi-family houses with mixed use (residential and commercial), as the areas are assessed separately.

The assessment rate of the city of Munich, which is currently 824 percent (as of 2025), is applied to the property tax assessment amount determined by the tax office and noticeably influences the amount of tax.

Keep an eye on tenancies and ancillary costs

The property tax is among the apportionable ancillary costs, which means that an increase in this tax directly affects the utility bill has an impact. Especially in existing tenancy agreements, it is therefore essential to communicate the adjustment clearly and transparently. At the same time, it makes sense to review ongoing contracts so that you can avoid later misunderstandings. Depending on the property and the composition of the tenants, individual solutions can also be found, for example through staggered increments or advance payments.

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Impact on the valuation of real estate

Even if the new tax is not directly based on market value, it indirectly alters the attractiveness of individual properties, especially in the case of capital investments. Higher ongoing costs affect the net yield and are increasingly being taken into account in purchase decisions. At the same time, particularly efficiently laid-out properties with a small footprint may offer advantages over more sprawling properties with comparable usage. For prospective buyers, it is therefore crucial to inquire about the expected property tax in advance.

These measures are helpful now.

To be prepared, you should have the following documents ready in an organized manner.

• extract from the land register
• Cadastral map or site plan
• Calculation of living space
• Construction documents or energy certificate (for floor space measurements)
• Tax assessments of previous years for comparison

Digital inquiries at the cadastre office or building authority also provide information on relevant area measurements. In the event of discrepancies between old and new values, the tax office should be consulted.

Deadlines that you should know as an owner

In Bavaria, the deadline for submitting the property tax return ended on April 30 and May 2, 2023, respectively.

Starting January 1, 2025, the new property tax based on the area model will be legally binding. If important information is missing or the return has not yet been filed, contacting the tax office promptly is therefore recommended. Otherwise, late-filing penalties and further legal consequences are imminent. In addition, if the filing is late, the tax office may independently assess the values based on its own data, which under certain circumstances may lead to inaccurate or unfavorable classifications.

Contact person for any questions

The most important places for information are:

• the Munich tax office (for questions regarding assessments and surface values)
• the City of Munich and the Department of Public Order (information on the applicable assessment rate)
• Tax consultants or income tax assistance associations (in the case of more complex situations, for example with rented properties or mixed forms)
• Guide to the real estate tax reform (for in-depth background information, calculation examples, and legal classifications)