Tax
Utility costs
Property tax reform 2026: First time in the utility bill
New property tax assessments have been in effect since 2025. The amounts will appear in utility bills for the first time in 2026, with noticeable changes in some cases.
Peter Guthmann
Why 2026 matters
Germany's property tax reform (Grundsteuerreform) took effect on 1 January 2025. But its impact on tenants only becomes visible in 2026: the utility bill (Betriebskostenabrechnung) for 2025 will include the new amounts for the first time. For landlords in Berlin, this means the bill that must reach tenants by 31 December 2026 at the latest will be based on the newly calculated property tax values.
What changed in the assessment
The reform completely overhauled the valuation basis for land and buildings. The previous standard values (Einheitswerte) -- last determined in 1964 in western Germany and in 1935 in eastern Germany -- have been replaced by model-based values. Under the federal model that Berlin applies, the calculation primarily factors in standard land values (Bodenrichtwerte), statistical net cold rents, and building characteristics such as year of construction and floor area.
Berlin lowered its municipal multiplier (Hebesatz) from 810 percent to 470 percent. This was a political adjustment to make the transition revenue-neutral for the city overall. The tax assessment rate (Steuermesszahl) for residential properties is 0.31 per mille, and 0.45 per mille for non-residential properties.
Revenue-neutral does not mean burden-neutral
The reassessment shifts the tax burden: for some owners, property tax goes down; for others, it goes up. The direction depends on how the new property tax value compares to the old standard value. Properties in sought-after locations with high land values may face higher charges, while owners in less in-demand areas pay less.
The property tax is calculated as: property tax value x tax assessment rate x municipal multiplier. For residential properties in Berlin specifically: property tax value x 0.31 per mille x 470 percent.
Passing the cost to tenants
Property tax is an allocable utility cost under Section 2 of the German Operating Costs Ordinance (Betriebskostenverordnung, BetrKV). The prerequisite is that the allocation of operating costs has been effectively agreed upon in the lease. Without such an agreement, the landlord bears the property tax. Allocation is typically based on living area.
For vacant units, the property tax may not be passed on to the remaining tenants. If the new property tax assessment is issued after the utility bill has been prepared, the landlord can claim additional costs within three months of becoming aware, under the conditions of Section 556(3) of the German Civil Code (BGB).
What landlords should do now
Landlords should review the new property tax assessments and compare them with previous advance payments. If there are significant differences, it makes sense to adjust tenants' monthly advance payments to avoid large back-payments or refunds.
The reform is particularly relevant for owners of apartment buildings with many units: even moderate changes per unit add up to noticeable totals. If you are considering selling a property, you should factor the new property tax burden into the valuation. It can affect yield calculations and may therefore be relevant for potential buyers.
This article is for general information purposes only and does not constitute tax or legal advice. The content does not replace individual consultation with a tax advisor or attorney. No liability is assumed for accuracy or completeness.