Passing property tax on to tenants in Germany (2026)
The owner pays Germany's property tax (Grundsteuer) to the municipality – but the tenant may ultimately bear it. It counts among the apportionable operating costs, yet this is not automatic: it requires the right clause in the lease and a correct annual statement. And since the reform took effect on 1 January 2025, the amount can look markedly different from before. This guide explains what landlords need to watch in 2026.
Are landlords allowed to pass property tax on to tenants?
Yes. The Grundsteuer is expressly listed as an apportionable type of operating cost: operating costs include "the ongoing public charges on the land, namely the property tax" (§ 2 no. 1 of the Operating Costs Ordinance, BetrKV). It arises on an ongoing basis and is therefore a genuine operating cost under § 1 of that ordinance – unlike administration costs or maintenance and repair costs, which are explicitly excluded from operating costs.
Being apportionable, however, does not mean it is apportioned automatically. The tenant bears operating costs only where the parties have agreed that they do (§ 556 (1) of the German Civil Code, BGB). Without such a clause in the lease, the property tax stays with the landlord – it cannot be shifted onto the tenant after the fact.
What the lease has to provide
The basis is the operating-cost agreement. Two routes are common: an advance payment with an annual statement, or a flat rate. What matters is that the lease provides for apportioning operating costs at all – ideally by reference to the Operating Costs Ordinance, so that every type listed there (property tax included) is covered.
Where advance payments are settled, a hard deadline applies: the advance payments must be settled annually, and the statement must reach the tenant no later than the end of the twelfth month after the accounting period ends (§ 556 (3) BGB). After that, a back-claim is barred if the landlord is responsible for the delay. How the deadline runs and what a formally correct statement must contain is covered in the guide to the service-charge statement and its deadline for landlords.
When drafting a clause, keep a clean line around which items may enter the statement at all. Administration costs and repairs may not – the article on non-apportionable service charges collects the typical mistakes.
What changed in 2025: the property-tax reform
For the 2025 tax year the Grundsteuer was revalued nationwide. The current version of the Property Tax Act applies for the first time to the property tax of the calendar year 2025 (§ 37 (1) GrStG); a main assessment of the base amounts took place as of 1 January 2025 (§ 36 (1) GrStG). In practice this means most owners received a new property-tax notice during 2024 that takes effect from 2025.
For tenants the reform often becomes visible only in 2026 – namely when the service-charge statement for 2025 arrives. Depending on location, federal state and property, the amount has shifted noticeably – upwards as well as downwards. The apportionment rule itself is unchanged: the recalculated property tax remains apportionable exactly as before.
How the amount arises: three factors
The property tax is worked out in three steps. From the assessed value (Grundsteuerwert) and the assessment figure (Steuermesszahl) the tax office first computes the base amount; the municipality then applies its multiplier (Hebesatz). The formula at a glance:
| Step | Factor | In short |
|---|---|---|
| 1 | Assessed value | The value of the land determined by the tax office under the Valuation Act. |
| 2 | Assessment figure | A per-mille rate on the assessed value; yields the base amount (§ 13 GrStG). |
| 3 | Multiplier | A percentage on the base amount, set by each municipality (§ 25 (1) GrStG). |
The base amount arises by applying the assessment figure to the assessed value (§ 13 GrStG). In the so-called federal model the assessment figure is 0.31 per mille for developed residential land and 0.34 per mille for other land (§ 15 (1) GrStG). It is reduced by 25% for eligible subsidised housing (§ 15 (2) GrStG) and by 10% for listed monuments (§ 15 (5) GrStG). Each municipality sets its own multiplier, and the resolution setting it must generally be passed by 30 June of a year with effect from its start (§ 25 (3) GrStG). Because the multiplier is freely chosen, the municipality largely decides how high the tax ends up.
Note – no single nationwide rate: the per-mille figures above apply in the federal model. Several states – among them Baden-Württemberg, Bavaria, Hamburg, Hesse and Lower Saxony – use the opening clause and calculate under their own model with different figures. What governs is always your property-tax notice and the model in force in your federal state.
Worked example (federal model)
A number example makes the chain tangible. It is for illustration only – your actual figures are on your notice:
| Step | Value |
|---|---|
| Assessed value (residential land) | €300,000 |
| × assessment figure 0.31 ‰ | = €93 base amount |
| × multiplier 500% | = €465 property tax per year |
| Apportioned to a 60 m² flat (building: 100 m²) | = €279 for the tenant |
The annual property tax of €465 is split here by floor-area share: the 60-square-metre flat accounts for 60 of 100 square metres, i.e. €279. If one flat stands empty, its share stays with the landlord.
Apportionment in practice: distribution key and vacancy
How the property tax is split between several parties follows the agreed distribution key. Where the parties have agreed nothing else, operating costs are apportioned by floor-area share (§ 556a (1) BGB). For let condominium property, absent a differing agreement, the owners' association's distribution key applies (§ 556a (3) BGB).
The key point for landlords: vacancy is on you. The property-tax share falling on an empty flat cannot be spread over the remaining tenants – it stays with the owner. As a deductible expense the self-borne property tax at least lowers the taxable letting result; how the property tax feeds into profitability as an ongoing item is shown in the guide to the cash flow of a property. Where the yield falls far short of the customary level across the whole year, a property tax relief for rent loss and vacancy may also be available – on its own application deadline.
What landlords should do now
- Check the lease: is apportioning operating costs agreed at all? No clause, no apportionment.
- Use the new notice: put the property-tax amount that applies from 2025 into the statement – do not carry the old one forward.
- Meet the deadline: deliver the statement no later than twelve months after the accounting period ends.
- Apply the distribution key: usually by floor area; carry vacancy shares yourself.
- Keep the evidence: the property-tax notice is the proof the tenant may inspect.
Operating costs and property tax under control
RenoDiary records the ongoing costs per property – from property tax to maintenance – and prepares them for the statement, the cash flow and your tax return. GDPR-compliant and without a paper mess.
Try it for freeWhat the courts have decided
Mixed-use buildings raise a follow-up question that § 556a BGB does not spell out: does the landlord first have to carve out a share of the property tax for the commercial units before apportioning the rest by floor area?
BGH, judgment of 10 May 2017 – VIII ZR 79/16
For a plot used partly commercially and partly for residential purposes, apportioning the property tax needs no advance deduction for the commercially used units. The reason: property tax is a tax on the property itself, independent of income – it is based on the officially assessed value and the municipal multiplier, not on how much income the commercial or residential use actually generated in the accounting year. Under the Senate’s settled case law, an advance deduction is only required where the commercial use provably causes substantial extra cost per square metre – and for property tax that is structurally excluded. For landlords with mixed-use buildings this means: the property tax may be apportioned uniformly by floor area, without carving the commercial units out separately.
Frequently asked questions
Must the property tax be named individually in the lease?
No. It is enough that apportioning operating costs is agreed – ideally by reference to the Operating Costs Ordinance. The property tax is listed there as its own type of operating cost and is thus covered.
Can I pass the property tax on retroactively?
Only within the running statement and its deadline. A type of operating cost that is not agreed in the lease at all cannot be introduced unilaterally after the fact.
What about owner-occupied or empty units?
Their property-tax share is borne by the owner. Only the share falling on let floor area can be apportioned; the rest stays with you.
Sources
- § 2 BetrKV (apportionable operating costs, incl. property tax) — Gesetze im Internet (retrieved on 17 August 2026)
- § 1 BetrKV (definition of operating costs; administration/maintenance excluded) — Gesetze im Internet (retrieved on 17 August 2026)
- § 556 BGB (agreement and settlement deadline) — Gesetze im Internet (retrieved on 17 August 2026)
- § 556a BGB (apportionment basis / distribution key) — Gesetze im Internet (retrieved on 17 August 2026)
- § 13 GrStG (assessment figure and base amount) — Gesetze im Internet (retrieved on 17 August 2026)
- § 15 GrStG (assessment figure for land) — Gesetze im Internet (retrieved on 17 August 2026)
- § 25 GrStG (setting the multiplier) — Gesetze im Internet (retrieved on 17 August 2026)
- § 36 GrStG (main assessment 2025) — Gesetze im Internet (retrieved on 17 August 2026)
- § 37 GrStG (first application from 2025) — Gesetze im Internet (retrieved on 17 August 2026)
- BGH, judgment of 10.05.2017 – VIII ZR 79/16 (no advance deduction for property tax on commercially used units) — Federal Court of Justice (retrieved on 25 August 2026)
This article offers general orientation and does not replace individual tax or legal advice within the meaning of § 3 StBerG. Property-tax amounts, municipal multipliers and state models differ – what governs is your property-tax notice, the lease and advice from an authorised person.