Zweitwohnungsteuer: the second-home tax in Germany

Where the power comes from

Article 105(2a) of the Basic Law gives the states the power to legislate on local consumption and expenditure taxes, “so long as and to the extent that they are not similar to taxes regulated by federal law”. The states pass framework laws, and municipalities then adopt bylaws (Satzungen). The Bavarian local taxes act, for instance, says in article 3(1) that municipalities may levy local consumption and expenditure taxes under that condition.

The Federal Constitutional Court describes the tax as a tax on expenditure: it reaches the economic capacity that shows in how a person spends income, and the rent paid is a proxy for that capacity (decision of 18 July 2019, paragraphs 39 and 56). It is not a charge for any service from the municipality.

Who owes it

The bylaw usually targets people who hold a second home in the municipality for their personal life while their main home is in another building. Berlin’s finance department says that anyone keeping a second home there pays, as owner, tenant or other authorised user, including a home provided free of charge. Berlin applies it even if the main home is also in Berlin. The department adds that a student with a Berlin flat and a main home at their parents’ address elsewhere also pays, citing a Federal Fiscal Court ruling (II R 5/08).

The tax is therefore not limited to foreign buyers. It also hits Germans and residents who keep two homes. Because it follows the municipality, a flat in one town may be taxed while a similar flat in the next town is not.

How the amount is set

The bylaw sets both the base and the rate, so you read the bylaw of the municipality concerned. Two examples show how far they can differ.

Berlin. The base is the net cold rent (Nettokaltmiete), that is, rent without operating and heating costs. For an owner-occupied flat or one with no rent, the figure comes from the local rent index (Mietspiegel). The rate was 15% until 31 December 2024 and is 20% from 1 January 2025. As a calculation from the department’s figures, a net cold rent of €1,000 a month (€12,000 a year) gives €2,400 a year at 20%.

Oberstdorf and Sonthofen (Bavaria). The 2019 court decision quotes bylaws that set the tax by an annual rent figure, with fixed amounts for rent bands. One of them set €310 up to a rent of €3,800 a year and €1,030 above €7,201. The Court found the rent figure unconstitutional because it relied on 1964 valuation data, so those bylaws had to be replaced by 31 March 2020. This shows why municipalities have changed their methods and why an old online figure is unreliable.

Limits set by the state

Some states put a floor under the tax. The Bavarian act (article 3(3)) says a tax on holding a dwelling is not levied if the taxpayer’s positive income two years earlier did not exceed €29,000 (€37,000 for couples who live together), and that the tax is capped at one third of the amount by which income exceeds that threshold. The person must apply by the end of the month after the tax year. This text is the version on the Bavarian law portal when this guide was checked; Bavarian municipalities use it, other states may not.

Reporting and deadlines

Reporting rules are local. In Berlin the return is due by 31 May of the year for which the base is set, or, if liability starts after 1 May, by the end of the month after you move in. The department says the tax office usually writes about a month after you register a secondary residence, but you must file even without a reminder. Berlin sets the base for roughly three years and adjusts it earlier if a rent reduction is notified by 31 December of the year it should first apply. Other municipalities differ, so use the notice you receive and the bylaw.

Exemptions

Berlin lists a short set: care facilities, therapeutic and youth welfare housing, allotment garden huts, women’s shelters, prison-related accommodation, and work-related housing for a married or registered couple whose joint main home is outside Berlin. Personal reasons such as work, training or study do not count otherwise. Other municipalities may differ.

Registering a second address

The tax often follows the registration of a second residence. See registering your address (Anmeldung) for the registration rules. Whether you can avoid the tax by choosing which home is your main one is a legal question for a tax adviser, and the choice has other consequences.

Which professional to consult

The municipal tax office (Steueramt) can tell you whether a bylaw exists, and a tax adviser (Steuerberater) can check your notice. A real estate agent cannot confirm the local rate; ask the municipality.