Cadastral values can grow by 25-40%
Real estate experts see injustice in the new methodology for determining cadastral values - in order to bring them closer to the market price level, the cadastral values for buildings and land developed according to the new methodology could increase by 25% to 40% on average, except for exclusive properties that are not really identified. Meanwhile, the Ministry of Finance is ready for significant real estate tax changes only in case of an equal situation, reported LNT TOP10. Belatedly, the State Land Service (VZD) in cooperation with the Ministry of Justice (MoJ) has developed a new version of how cadastral values will be determined for various properties in the future, which are then used for tax calculations. The new draft of cadastral valuation regulations has been submitted for public consultation until May 14. If the methodology is accepted by the government, almost everyone will feel the changes, LNT Top10 experts say. First of all, because VZD has set a higher bar for compliance of cadastral value with market prices, which is now planned to be around 100%. This alone means an increase in the cadastral value by at least 15%. However, for a large part of apartments and houses, the changes will be even more noticeable, as the new calculations will also take into account changes in market prices. “It is difficult to say, of course, in each place differently, and how it will be calculated according to its methodology, but the increase will be significant. I think it will be 20-25%,” admitted Kristīne Dubane, head of the Residential Space Department of the real estate company “Ober Haus”. “During the last 4 years, the values of the residential segment, which are apartments in new projects, according to modern requirements, have probably changed the most,” says Roberts Ardavs, head of the Appraisal Department of the real estate company “Latio”. The real estate market transaction data will first be used to determine one of the most important basic elements of the total cadastral value – the base value. They have been frozen since 2016, when market information from 2012 and 2013 was used in their development. The new values for 2021 are planned to be fixed on July 1 of this year, taking into account the transactions of at least the previous two years. The co-authors of the project hope that the new method will make it possible to determine the true values of properties, even if they are located next to each other in the same value zone. “There will no longer be such fragmented zoning as it is now, so zoning will already be the first filter,” explains S. Zvidriņa, general director of VZD. Since the properties are different, first the base value would be determined for the standard object. For example, in the case of an apartment, the interior will be evaluated, whether the apartment is located in a brick building, higher than the first floor, is well-equipped. If previously the base value was determined for 67 building types, now all multi-apartment buildings are combined in one group, and all detached houses in another. But the differences in cadastral values will be determined by whether the building has sewerage, water supply, firewood or central heating. Houses with a wooden exterior wall will be less valuable. But what will increase or bring the cadastral value closer to the market price of the relevant property will be the year of construction. The highest coefficient pays a 50% increase from the standard price – it will be for apartments in good condition, built from 2001 onwards. In the case of houses, the increase is expected to be 40%. See the full version of the article here
