Planned changes to the Valuation Act by the JStG 2022

In addition to more complicated valuation procedures, there is also the threat of higher valuations!

On July 28, 2022, the Federal Ministry of Finance sent the draft of an Annual Tax Act 2022 to the associations with a request for comments by August 11. In this context, changes are also planned in the context of the needs assessment of real estate. The aim of the planned changes is to achieve a valuation that is closer to the market value, based on the amended Real Estate Valuation Ordinance (ImmoWertV). Among other things, this will lead to significant changes in the valuation of real estate using the income and asset value methods.

Changes in the capitalized earnings method

In the capitalized earnings method, the main changes are in the determination of the operating costs and the level of the property interest rate. For example, the lump-sum determination of management costs based on a percentage of the annual rent, which has predominantly been used in the past due to a lack of corresponding publications by the valuation committee, will be abandoned. Instead, the management costs are determined on a much "smaller scale" on the basis of the number of square meters, the gross income and with a breakdown of management costs, maintenance costs and loss of rental income risk. In addition, the flat statutory property interest rate is reduced, which should lead to higher property values.

Changes in the asset value method

Within the framework of the asset value procedure, the previous determination of the building's real value has also been made more complex. In addition to the construction price indices and the reduction in age value previously taken into account, a regional factor is now also included in the valuation. In addition, the statutory real value factors previously applied will be increased as part of the real value procedure. This also leads to higher property values. For example, the value of a single-family home with a preliminary tangible asset value of EUR 500,000 and a standard land value of EUR 1,000 will increase by around 27% under the planned regulations.

Due to the rising standard land values in many regions, it can already be expected that the property values determined on the basis of the Valuation Act will increase significantly. This effect would be further intensified by the planned new regulations. The transfer of real estate assets as soon as possible is therefore likely to become even more important against the backdrop of the reform considerations.