With two rulings dated 27 May 2024 (II B 78/23 (AdV) and II B 79/23 (AdV)), the Federal Fiscal Court suspended the execution of two property tax value assessments issued under the federal model – thereby setting the benchmark against which the new property tax valuation must be measured ever since: If the determined property tax value exceeds the provable common value by 40 per cent or more, the taxpayer must be able to prove the lower value.

The case

In both proceedings from Rhineland-Palatinate, owners challenged their new property tax value assessments via interim legal protection. In one of the cases, it concerned a single-family home built in 1880 that had not been comprehensively renovated for decades – the typified valuation based on standard land value, area, and statistical net cold rent completely ignored the poor condition. The applicants argued that the determined property tax values were far above what their plots of land were actually worth. The Finance Court of Rhineland-Palatinate had already suspended the execution; against this, the tax authority appealed to the Federal Fiscal Court.

The decision

The BFH dismissed the tax authority's appeals and confirmed the suspension of execution. In detail:

Prohibition of excess limits typification: The legislator is permitted to apply extensive typification in property tax matters. However, the constitutional prohibition of excess mandates that the taxpayer must be able to substantiate a common value (gemeiner Wert) lower than the assessed property tax value – accordingly, the valuation regulations must be interpreted in a constitutionally compliant manner.

The 40 per cent threshold: A deviation is considered material and thus subject to correction whenever the assessed property tax value exceeds the substantiable common value by 40 per cent or more.

No requirement for full proof in expedited proceedings: To obtain a suspension of enforcement, it suffices to substantively plead the material deviation – a formal appraisal report is only required in the main proceedings.

Constitutional question left open: The Senate expressly left open whether the federal model is constitutionally compliant as a whole. This question was only answered in November 2025 with the rulings on case file II R 25/24 – ruling in favor of the model, while explicitly confirming this very method of proof.

What this means for property owners

These rulings have brought about more lasting changes to property tax valuation than many judgments in main proceedings:

• Statutory codification: With the Annual Tax Act 2024, the legislator incorporated this case law. Since then, § 220(2) of the Valuation Act (BewG) explicitly regulates the substantiation of a lower common value – incorporating exactly the 40 per cent threshold established in the rulings.
• Evidentiary requirements: Acceptable forms of proof include the appraisal report issued by the competent expert committee (Gutachterausschuss) or a qualified valuer, as well as a purchase price concluded in a timely manner under ordinary market conditions.
• The tax administration follows suit: Since the coordinated state directives of June 2024, the tax authorities have already granted a suspension of enforcement where the exceedance of 40 per cent is convincingly demonstrated.
• Only in the value-dependent model: This threshold applies to the federal model. The area-based models, such as those in Bavaria, do not recognize a value-based property tax value; Baden-Württemberg has established its own 30-per cent rule for its land value.

Conclusion

The rulings II B 78/23 and II B 79/23 have opened up the rigid typification of the federal model: Anyone whose property's condition, location, or encumbrances place it significantly below the established property tax value now has a clear leverage point. The 40-per cent threshold acts as both a hurdle and an opportunity – below it, the typified value remains unchanged; above it, the proven value compels the tax office to make a correction. The starting point for any assessment is a reliably determined market value.

From the same line of case law: II R 25/24: Federal property tax model is constitutional – BFH concludes the first test of its constitutionality

Answered briefly in our questions and answers: How are a property's property tax value and market value related?

For evidence that holds up before the tax office, a court or a bank, what is needed is a market value report.