Federal Constitutional Court Reviews Constitutionality of Property Tax

Germany's Federal Constitutional Court (BVerfG) is currently examining, based on a tax appeal, whether the valuation rules for the federal property tax model, implemented in 2022, are constitutional. The appeal specifically concerns the valuation of residential property, which is applied in nine federal states and with modifications in two others.

The Federal Fiscal Court (BFH) had previously found these regulations to be constitutional in a ruling from November 2025. The regulations are based on the BVerfG's 2018 decision, which stated that the previous valuation system was unconstitutional and could only be applied temporarily until the end of 2024.

Under the new system, property values are reassessed starting from January 1, 2022. In the federal model, the property tax value replaces the previous unit value from January 1, 2025. Particular scrutiny is given to the income-based valuation method, which applies to residential properties and is based on standardized rents and regional rental levels.

The national regulations, applied unchanged by nine states and with modifications by two states, aim to equalize differences between urban and rural areas. Five states utilize their own regulations that deviate from federal law. The outcome of this review by the constitutional court could have significant implications for property taxation in Germany.