BFH on Grundsteuer Baden-Wuerttemberg 2026

The BFH line 2024 to 2026 — three waves, one message

The case law on the Grundsteuer reform developed in three clearly delineated steps. To understand the current state, you need to know all three.

Wave 1: Interim decisions on the federal model (May 2024)

It started with two rulings of the II. Senate of 27 May 2024 (case nos. II B 78/23 and II B 79/23). Both cases from North Rhine-Westphalia, both federal model. The BFH granted suspension of enforcement (Aussetzung der Vollziehung) for Grundsteuer value notices and made it clear: taxpayers must be able to prove a lower fair market value in the individual case. The hardship rule does not contain a fixed statutory percentage threshold. Under the existing BFH case law, however, a successful proof will typically only come into play when there is a substantial deviation between the actual value and the assessed reference value. Academic literature frequently discusses a magnitude of around 40 per cent. Important for the classification: these decisions concerned the federal model only — they became the blueprint for the later main-proceeding ruling, even though the BW model was outside their scope.

Wave 2: Main-proceeding ruling on the federal model (11.12.2025)

On 11 December 2025 the BFH dismissed in three main proceedings (II R 25/24, II R 31/24 and II R 3/25) claims from North Rhine-Westphalia, Saxony and Berlin as unfounded. Result: the federal model is constitutional. The valuation provisions of the income-value method are sufficiently equality-conforming, the legislator may typify. Anyone wanting to prove a lower fair market value needs a substantial deviation. The magnitude of around 40 per cent discussed in the interim decisions continues to apply as orientation, but it is not a rigid statutory threshold.

Wave 3: Main-proceeding ruling on the BW land-value model (20.05.2026)

With two proceedings — a semi-detached house from 1938 on about 400 square metres and a 1,100 square-metre plot with a two-family house — the BW model came before the BFH. Case nos. II R 26/24 and II R 27/24, ruling of 20 May 2026. Here too: constitutional. The reasoning of the II. Senate rests on three points:

1. The state legislator may deviate from the federal regulation (state opening clause, Art. 72 Abs. 3 S. 1 Nr. 7 GG) and choose a pure land-value taxation.
2. Typification — building, age and condition stay out — is permissible in mass procedures because individual valuation of each property would not be administratively feasible.
3. § 38 Abs. 4 LGrStG BW delivers the constitutionally required safety valve: anyone who proves a substantial value deviation through a qualified appraisal can obtain a correction. § 38 LGrStG BW does not name a rigid percentage threshold. The BFH case law and academic literature orient themselves for Baden-Wuerttemberg around deviations from approximately 30 per cent, and for the federal model around approximately 40 per cent.

The BFH rejected the claimant side's argument that the model violates the principle of equality from Art. 3 Abs. 1 GG (the German constitution). Owners of a villa and owners of a dilapidated apartment building on a plot of the same size therefore pay the same Grundsteuer — a consequence that remains politically contested but is now legally covered.

The land-value model — why Baden-Wuerttemberg calculates differently

Baden-Wuerttemberg is the only federal state to have chosen a pure land-value model. While the federal model combines the land value with flat-rate yield values for buildings, Baden-Wuerttemberg is only interested in the land itself.

The calculation logic is:

Grundsteuer assessment base = Bodenrichtwert × plot area × tax assessment rate
Grundsteuer = assessment base × multiplier

The tax assessment rate is 1.3 per mille (§ 40 Abs. 1 LGrStG BW). For plots used predominantly for residential purposes, a discount of 30 per cent applies (§ 40 Abs. 2 LGrStG BW). The multiplier is set by each municipality itself.

Comparison federal model vs. land-value model

This difference explains why the burden in Baden-Wuerttemberg has risen dramatically, particularly for undeveloped or sparsely built plots in sought-after locations. Anyone inheriting a simple terraced house in Stuttgart-Sillenbuch or Heidelberg-Neuenheim pays the full tax on the high Bodenrichtwert — regardless of the condition of the house.

Important for succession planning: a high Bodenrichtwert raises the running Grundsteuer and at the same time pushes the Erbschaftsteuer upward. Both burdens together should be considered jointly in every wealth transfer in Baden-Wuerttemberg.

Which hopes are now over

Three argumentation lines that Steuerberater (German tax advisors) and lawyers have pursued for years are largely settled with the BFH decisions:

1. The unconstitutionality of the model

For over two years, associations such as Haus & Grund Baden-Wuerttemberg and the Bund der Steuerzahler argued that the land-value model violates the principle of ability to pay. The BFH rejected this argument. A constitutional complaint at the Federal Constitutional Court is pending, a decision is expected in 2027 at the earliest.

2. The general challenge to Bodenrichtwerte

Bodenrichtwerte are set by expert committees. To criticise them across the board as too high is not enough. The BFH requires concrete evidence, backed by a qualified expert report, of a substantial value deviation (§ 38 Abs. 4 LGrStG BW, BFH case law of 20.05.2026). The magnitude of around 30 per cent applies in literature and practice as orientation, but it is not laid down by statute.

3. The hope for a reform pause

Many owners had hoped that the legislator would amend the model after a BFH ruling against it. This option is off the table for now. The Green-Black state government in Baden-Wuerttemberg feels confirmed by the ruling and plans no corrections to the LGrStG in 2026.

Practice example: what the decision actually costs

A typical death event (Erbfall) from my advisory practice: Family M. inherits in 2026 a single-family home in Heidelberg. Plot size: 600 m². Bodenrichtwert: 1,800 euros per square metre. The 1960s house is in need of renovation.

Calculation under the land-value model BW:

Over 5,000 euros of Grundsteuer per year — for a house in need of renovation that on the market, given the renovation backlog, would perhaps fetch 700,000 euros. Under the old law the family would have paid under 1,000 euros. This five-fold increase is reality and is now legally final.

If you take over such a property as part of an Erbengemeinschaft (community of heirs), the pressure multiplies. Anyone who cannot bear the running burdens has to act. The guide on the Erbengemeinschaft with real estate shows the dissolution strategies that are more important than ever in 2026.

What happens to the other state models

Five federal states made use of the state opening clause and built their own Grundsteuer models: Baden-Wuerttemberg (pure land-value model), Bavaria (pure area model), Hamburg (residential-location model), Hesse (area-factor procedure) and Lower Saxony (area-location model). All other states follow the federal model. Saarland and Saxony use the federal model with their own tax assessment rates.

With the BW ruling, the main-proceeding decision for one of these special models has been handed down. Three more are still pending at the BFH:

• Hamburg and Hesse: Oral hearing at the BFH expected November 2026.
• Bavaria: Proceedings expected in the first half of 2027.
• Lower Saxony: No main proceedings currently pending at the BFH, the 2024 interim-decision line remains.

Anyone holding property in one of these states therefore has a different starting position than a BW owner. In Hamburg and Hesse a pending objection can still make sense, since the BFH decision could still alter the valuation system. Fully legally settled in 2026 are only BW and the federal model.

Politics remains restless. Associations such as Haus & Grund and the Bund der Steuerzahler continue to demand reform, individual state governments — particularly in Bavaria — discuss tightening their models. Before 2027, however, serious statutory changes are not to be expected, since the political balance of the reform from the states' perspective is too comfortable: higher revenue for the municipalities without Federal-Fiscal-Court reversal risk.

What owners and heirs can do now

Despite the BFH's hard line there are four concrete adjusting screws for 2026:

Check hardship application under § 38 Abs. 4 LGrStG

Anyone who can prove a substantial deviation between the actual land value and the assessed Bodenrichtwert should consider a hardship application. § 38 LGrStG BW does not contain a rigid percentage threshold; BFH case law of 20.05.2026 and academic literature orient themselves around deviations from approximately 30 per cent.

Practical points for the application:

• The competent authority is the tax office that issued the Grundsteuer assessment notice (Belegenheits-Finanzamt, the tax office where the property is located).
• Qualified market-value expert reports are generally accepted, ideally by publicly appointed and sworn experts.
• The burden of proof for the value deviation lies with the taxpayer.
• A qualified land-value report costs between 1,500 and 3,500 euros, more for very large or special plots.
• The effort is economically worthwhile only when the annual tax saving exceeds the expert costs over a manageable period.

Objection against the Grundsteuer assessment notice

Even though the model holds: individual notices can be erroneous. Wrong area figures, wrong Bodenrichtwert, wrong use classification. The objection deadline is one month (§ 355 AO).

Rethink plot strategy

For large plots in expensive locations, a division can become economical — particularly if gift planning is on the agenda anyway. The burden of Erbschaftsteuer on real estate and the running Grundsteuer have to be considered together in 2026.

In case of extreme burden: disclaim the inheritance

If the Grundsteuer burden in combination with other running costs and the Erbschaftsteuer makes the inheritance economically uninteresting, disclaimer is a serious option. Which deadlines and costs apply is described in the article Disclaiming an inheritance — deadline, costs, procedure and consequences. Missed disclaimer deadlines are not a trifle: anyone who lets the date pass is personally liable for outstanding Grundsteuer too. What then helps is in the article on the missed disclaimer deadline.

In my conversations with clients (Mandanten) from Baden-Wuerttemberg, a new pattern is emerging in 2026: the next generation often no longer wants to take over the parental property at all. The running costs — Grundsteuer, insurance, maintenance, energy-renovation obligations — overwhelm many heirs. Anyone who plans in good time can defuse these problems. A well-structured Berliner Testament 2026 (joint spousal will under § 2269 BGB) with clear rules on real-estate succession is part of that.

Frequently asked questions

When did the BFH decide on the Grundsteuer Baden-Wuerttemberg?

The main-proceeding ruling on the BW land-value model dates from 20 May 2026 (case nos. II R 26/24 and II R 27/24). The BFH declared the model constitutional. The earlier interim decisions of 27.05.2024 (II B 78/23, II B 79/23) concerned the federal model in a North Rhine-Westphalia case — they run separately on the merits from the BW line.

Did the BFH also confirm the federal model?

Yes. On 11 December 2025 the II. Senate confirmed the federal model as constitutional in three proceedings (II R 25/24, II R 31/24, II R 3/25). The claims came from North Rhine-Westphalia, Saxony and Berlin. Result: typifying mass valuation is permissible. Individual proofs of a lower fair market value remain possible. There is no rigid statutory percentage threshold; academic literature and existing case law discuss a magnitude of around 40 per cent for the federal model.

Which state models are still pending at the BFH?

Still to be heard in 2026/2027 are Hamburg and Hesse (oral hearing expected November 2026) and Bavaria (first half of 2027). Lower Saxony currently has no main proceedings at the BFH. Anyone holding property in these states should keep objection proceedings alive — the valuation system could still theoretically change, even though the BFH line so far runs consistently in favour of state legislators.

Can I still sue against my Grundsteuer assessment?

A lawsuit has a chance of individual success if the concrete land value substantially deviates from the assessed Bodenrichtwert (§ 38 Abs. 4 LGrStG BW, BFH case law of 20.05.2026). You need a qualified expert report for that. The chances of success of general model proceedings against the model itself have declined considerably after the BFH decisions. A final decision of the Federal Constitutional Court is, however, still pending.

What does an expert report for the hardship application cost?

A qualified land-value report costs between 1,500 and 3,500 euros depending on complexity. For very large or special plots, more. The investment only pays off when the annual tax saving exceeds the expert costs in the long run.

Does the BFH ruling also apply to other federal states?

No, the ruling II R 26/24 and II R 27/24 refers specifically to the State Grundsteuer Act of Baden-Wuerttemberg. Bavaria, Hamburg, Hesse and Lower Saxony have chosen their own models — they run in separate BFH proceedings. The federal model was confirmed separately by ruling of 11.12.2025.

How high are the multipliers in Baden-Wuerttemberg in 2026?

The multipliers differ considerably from one municipality to the next and can be adjusted annually. The relevant municipal multiplier statute (Hebesatzsatzung) of the respective municipality is decisive at any given time. Rural municipalities are often significantly below the rates of the larger cities.

Can the Federal Constitutional Court still overturn the ruling?

A constitutional complaint is pending. Realistically a decision of the Federal Constitutional Court is not to be expected before 2027. Even with a positive ruling, existing assessments would remain enforceable until then. Anyone who bets on Karlsruhe overturning the model by holding back payments takes high risks.

What happens if I do not pay the Grundsteuer?

The Grundsteuer is a municipal tax. In case of non-payment, enforcement follows after a reminder. For real estate, forced auction looms. In the death event (Erbfall) too, the heir is personally liable for outstanding Grundsteuer — this can be a reason for disclaimer.

Conclusion and next steps

The BFH ruling on the Grundsteuer Baden-Wuerttemberg 2026 has created bitter clarity. Anyone who hoped for a miracle before the courts should replan. The legal levers are narrow — they lie in the detail of the individual case and in the early structuring of wealth succession.

If you have an inherited or to-be-inherited property in Baden-Wuerttemberg and are unsure whether the running burdens remain bearable, speak with me. In an initial consultation we clarify whether a hardship application makes sense, whether the Erbschaftsteuer can be lowered through skilful structuring, and which options — from anticipated succession to disclaimer — are economically best in your case.

Book a meeting at sprichmit.florian-enders.de — the first 30 minutes are free of charge.