Calculating assessed value: Definition, formula, and significance

Key facts at a glance

• The assessed value (“Einheitswert”) was determined for all types of land and real estate to calculate property tax as well as other levies and fees

• It was calculated by the tax authorities using either the income approach or the cost approach

• The underlying data for determining the assessed value dated back to 1935 (new federal states) or 1964 (old federal states)

• The assessed value was one of several types of real estate valuation, alongside market value, fair value, and mortgage lending value

• Since January 2025: the assessed value has been replaced by the property tax value (“Grundsteuerwert”) as part of the property tax reform

What is the assessed value?

The assessed value for real estate was a tax base used until the end of 2024 to determine property tax. It was calculated for both undeveloped land and developed properties with different types of use. The responsible tax office determined the assessed value and communicated it to both the property owner and the local authority. The calculation was based on valuation standards that dated back several decades. For properties in the former West Germany, values from 1964 were used, while for properties in the former East Germany, values from 1935 applied. As a result, there were sometimes significant differences between a property’s assessed value and its actual market value. For this reason, the assessed value has no longer been used to calculate property tax since 2025.

Who is the assessed value relevant for?

Until the end of 2024, the assessed value was a key figure for all owners of houses, other real estate, or land in the context of property taxation. However, this has fundamentally changed with the 2025 property tax reform. Today, the assessed value no longer plays a role in tax calculations. Nevertheless, there are still situations in which you may need to determine the assessed value as a property owner. This can be the case, for example, if an older case has not yet been finalized and relates to a property tax assessment period prior to 2025. Calculating the assessed value can also help you review tax notices from the authorities or estimate expected costs in advance. In rare cases, transitional periods may still apply, during which the assessed value continues to be used as a basis for calculation.

Important distinction: assessed value vs. property value

It is important to understand that the assessed value is not the same as a property’s market value. While the assessed value was used solely for tax purposes and was based on outdated data, the property value reflects the current market worth of a property. If you are planning to sell your home, you can learn more about how to determine its market value. Our local real estate agents will be happy to assist you in assessing the market value of your property or handling the sale on your behalf.

Calculating the assessed value: how it works

If you want to calculate the assessed value of a property or plot of land, it is important to distinguish between the income approach and the cost approach. The so-called income approach is used for developed properties, regardless of whether they are used for residential or commercial purposes. For all undeveloped land, the assessed value is instead calculated using the cost approach.

Calculating the assessed value for a property

For all developed properties, the assessed value was determined using the income approach. This applies to residential properties as well as commercial properties and mixed-use buildings.

The formula used to calculate the assessed value is:

Annual gross rent × multiplier

If no annual gross rent is available due to owner-occupation, the local comparable rent is used as a basis instead. The multiplier takes into account factors such as the type of property, its age, and the location of the land. You can find the applicable multiplier for your property in the assessed value tables Annexes 3 to 8 of the German Valuation Act – BewG. There are also online tools that offer assessed value calculators. However, when using such tools, it is important to ensure the source is reliable. While they can provide a useful estimate, they do not replace the official calculation carried out by the tax authorities.

Calculating the assessed value for undeveloped land

For undeveloped land, it is not possible to determine an income value. For this reason, the tax office applied the cost approach until the end of 2024. Under this method, the size of the plot is multiplied by the standard land value (“Bodenrichtwert”). The result is then reduced by 20%, which yields the assessed value of the land. In this article, we explain in more detail what exactly the standard land value is.

Calculating property tax based on the assessed value

Once you have calculated the assessed value, you can use it to determine the amount of property tax.

The formula is:

Assessed value × tax assessment rate × municipal multiplier

The tax assessment rate differed for residential space and commercial space, and its exact value depended on the federal state. The municipal multiplier can be obtained from your local authority, as it is set individually by each municipality and may change annually.

Impact of the property tax reform on the assessed value

The property tax reform came into effect on January 1, 2025. It has had a significant impact on the assessed value, as it is no longer relevant for calculating property tax from that date onward. We have summarized all key information about the new property tax for you. In practical terms, the assessed value for real estate has lost its significance since the reform came into force.

Conclusion: calculating the assessed value

For a long time, the assessed value was an important factor in the taxation of land and real estate. However, this changed with the 2025 property tax reform. Since then, the assessed value has effectively lost its relevance for real estate. In certain cases—such as unresolved legacy cases—it may still be useful to calculate the assessed value. This can be done using the formula annual gross rent × multiplier or, for undeveloped land, via the cost approach. Online tools such as assessed value tables with multipliers or calculation tools can provide helpful guidance. However, it is important to keep in mind that the data and results may not always be accurate. If you would like to determine the current value of your property in preparation for a sale, feel free to contact us and benefit from the expertise of our real estate agents.