Thuringia loses 42 million euros due to real estate tax cut

Thuringia's state budget has suffered a significant blow, losing an estimated 42 million euros in tax revenue last year following a controversial reduction in the real estate transfer tax. The tax rate, crucial for property transactions, was lowered from 6.5% to 5.0% on January 1, 2024, a decision driven by the CDU party's aim to make homeownership more accessible for families.

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Without the tax rate reduction on January 1, 2024, the state would have mathematically achieved revenues from the real estate transfer tax of around 187.4 million euros.

However, Sascha Bilay, a state parliament member from the Left party, contests the effectiveness of this policy. Citing a response from the Ministry of Finance, Bilay noted that without the tax cut, the state would have collected approximately 187.4 million euros from real estate transactions. Instead, the revenue for 2025 amounted to about 145.2 million euros.

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The expected boom in construction for families has not materialized.

Bilay further questions whether the tax reduction has genuinely spurred a boom in family home purchases. Data from the State Office for Soil Management and Geoinformation indicates around 6,200 contracts for owner-occupied homes were recorded last year. While this shows an increase compared to 2023 and 2024, it remains below the levels seen in previous years characterized by lower interest rates and construction costs.

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For the decision to acquire real estate, the tax is completely irrelevant.

"The expected boom in construction for families has not materialized," Bilay stated, concluding that the tax rate is "completely irrelevant" to the decision-making process for acquiring property. He criticized the government's approach, highlighting a contradiction between forgoing revenue and subsequently lamenting the poor financial situation while announcing cuts to social organizations and infrastructure investments. This, he argues, is an inconsistent policy.

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On the one hand, revenue is forgone - on the other hand, the poor budget situation is lamented and cuts to social organizations and investments in infrastructure are announced. That does not fit together.