Three further federal states have introduced their own property tax models based on the opening clause of the Basic Law (Art. 72 para. 3 no. 7 GG): Baden-Württemberg a modified land value model, Hamburg an area-residential location model, and Hesse an area-factor model. All three models were assessed as constitutional by the competent fiscal courts. For Baden-Württemberg, the Federal Fiscal Court (BFH) has already finally decided the matter; for Hamburg and Hesse, BFH appeals are pending.

Baden-Württemberg: Modified land value model (FG BW 8 K 2368/22 and BFH II R 26/24)

Baden-Württemberg chose a model focused on land: the basis of property tax B is exclusively the multiplication of the plot area and the standard land value (Bodenrichtwert), multiplied by a tax assessment rate of 1.3 per mille (for residential plots, 0.91 per mille with a 30 percent discount). Buildings are not taken into account at all. Since standard land values are periodically updated by the expert committees (Gutachterausschuss), the model is value-dependent – but only with regard to the land.

On 11 June 2024, the Fiscal Court of Baden-Württemberg ruled in two proceedings (case nos. 8 K 2368/22 and 8 K 1582/23) that the state property tax act of Baden-Württemberg is constitutional. The core of the decision: it does not violate Art. 3 para. 1 GG that the legislature levies property tax exclusively on land (excluding buildings), provided this is carried out consistently and in line with the overall system. Within a typifying valuation approach, a deviation of up to 30 percent from market value is still considered constitutional.

The BFH confirmed this assessment in rulings dated 20 May 2026 (case nos. II R 26/24 and II R 27/24) following the oral hearing on 22 April 2026. The official guiding principles:

"The legislature may enact generalizing, typifying and standardizing regulations. Plot area × standard land value is a lawful basis of assessment."

"It does not violate Art. 3 GG that rental income and actual building value are not taken into account."

"The standard land values determined by the expert committees (Gutachterausschuss) allow for some degree of imprecision – individual valuations of the approximately 5.6 million properties are not required."

For Baden-Württemberg, the matter is thus conclusively settled at BFH level. Appeals against the state model no longer have any prospect of success; only recourse to the Federal Constitutional Court remains for fundamental objections. For valuers this means: the land value model is legally binding and final. The standard land values of the expert committees (Gutachterausschuss) retain their central role as a basis of valuation – now also for property tax purposes.

Hamburg: Area-residential location model (FG Hamburg 3 K 176/23)

Hamburg combines an area-based model with a residential location component. The base amounts are EUR 0.02 per square meter of plot area and EUR 0.40 per square meter of building area. These amounts are multiplied by a residential location factor: for a normal residential location, a factor of 1.0 applies; for a good residential location, a factor of 1.25. The determination of the residential location is based on the Hamburg Residential Location Register, which is based on the local rent index. Housing associations and social housing, as well as listed monuments, receive reduced building area assessments.

On 13 November 2024, the Hamburg Fiscal Court ruled (case no. 3 K 176/23) that the Hamburg Property Tax Act (HmbGrStG) is formally and materially constitutional. The official guiding principles:

"The HmbGrStG is formally and materially constitutional."

"The building area may be valued 12.5 times higher than the plot area (EUR 0.40 versus EUR 0.02 per m²)."

The court emphasized that property tax is a tax on the object, which is not linked to individual economic capacity. The residential location factor is a permissible differentiating criterion that allows for moderate consideration of the actual quality of use without overburdening the administrative procedure with individual valuations. The appeal is pending before the BFH under case no. II R 15/25; an oral hearing is planned for November 2026.

Hesse: Area-factor model (Hesse Fiscal Court 3 K 663/24)

Hesse has developed the most complex of the state models: it combines area-based amounts (EUR 0.04 per m² of plot area, EUR 0.50 per m² of building area for residential use with a 30 percent reduction in the tax assessment rate) with a location-related factor. The factor is calculated according to the following formula:

Factor = (standard land value of the plot ÷ average standard land value of the municipality)^0.3

If the individual standard land value corresponds to the municipal average, the resulting factor is 1.0. The exponentiation by 0.3 ensures that above-average locations pay more, but not in proportion to the full increase in value – a deliberately dampened location surcharge.

On 23 January 2025, the Hesse Fiscal Court in Kassel ruled (case no. 3 K 663/24) that the Hesse Property Tax Act (HGrStG) violates neither the principle of legal certainty nor Art. 3 para. 1 GG. Core statement: property tax is linked to the possibility of using municipal infrastructure, not to individual earning capacity. The factor formula allows for a constitutionally permissible, moderate consideration of location without requiring the administrative effort of a full valuation. The appeal is pending before the BFH under case no. II R 12/25; an oral hearing is likewise scheduled for November 2026.

Comparison of the state models and recommended course of action

The four state models differ considerably in their design: Bavaria dispenses entirely with value components; Baden-Württemberg considers only the land value; Hamburg integrates a discrete residential location factor; Hesse calculates a continuous location factor based on the standard land value ratio.

All models have in common that no regular general reassessments with complete individual valuation are required, and that hardship relief and reduction provisions are provided for.

For property owners in Hamburg and Hesse, until the BFH decision is issued: objections against property tax assessments may be worthwhile if a suspension of proceedings under Section 363 para. 2 sentence 2 of the German Fiscal Code (AO) is requested, referring to the pending BFH appeals. In Baden-Württemberg, objections at BFH level are futile; for fundamental objections, only recourse to the Federal Constitutional Court remains. In Bavaria, BFH appeal options likewise remain open, presumably until 2027.