If a businessman considers it appropriate to challenge the cadastral value of real estate, then it is necessary to know the procedure for such a challenge. In what cases should you go to the commission, and when can you go straight to court?
If a businessman decides that the game is worth the candle, then it is necessary to prepare documents and begin the procedure of challenging the cadastral value of the property.
Cadastral value of the property
The cadastral value of a property is established as a result of state cadastral valuation procedures, by decision of the executive body of state power of a constituent entity of the Russian Federation and is used for taxation purposes. Over the past 3 years, cadastral valuation has been fundamentally shaken. On January 1, 2020, the Federal Law “On State Cadastral Valuation” came into full force (the transition period has already passed), which offers a completely new approach and methodology for determining the cadastral value of real estate.
The changes are aimed at applying a unified cadastral valuation algorithm throughout the country. For example, previously valuation services were provided by private independent appraisers under a government contract, approved by local (or regional) authorities, and Rosreestr acted as an arbiter. Such an organization of the assessment process yielded extremely negative results.
Now a decision has been made to introduce the institution of state cadastral appraisers and transfer the powers to determine the cadastral value to state budgetary institutions that will conduct this activity on an ongoing basis. The cadastral value is calculated using the mass valuation method using the methodology of any of the approaches (cost, comparative or income) and only in exceptional cases is an individual calculation used.
The cadastral valuation will change
Now further changes have been made to this law. First of all, the responsibility of state appraisers has been increased.
In the law, the state expands the powers of state budgetary institutions (GBU) involved in state bonds in the field of collecting information about objects for the formation of cadastral value and tightens control.
In particular, additional grounds are being introduced for the dismissal of directors of State Budgetary Institutions. Thus, if the court makes one hundred or more decisions in the corresponding calendar year that have entered into legal force, which satisfied claims challenging the decisions of a budgetary institution to refuse to recalculate the cadastral value, the director of the State Budgetary Institution may be dismissed.
At the same time, the law contains a clause that the share of such court decisions should not exceed 20 percent of the total number of decisions taken to challenge the cadastral value of this government agency.
Another innovation in the law “On Cadastral Valuation” will be a change in the frequency of the State Property Valuation. At the same time, in relation to cities of federal significance, the frequency will remain the same, and here the cadastral valuation will be carried out once every two years. In other regions, the State Defense Committee will be held once every four years.
Having clarified the arithmetic average periods for carrying out state assessments, the law says that regions should not delay the cadastral valuation and by the end of 2022, the implementation of state assessments of all land plots should be completed, and by the end of 2023 - all buildings, structures, structures and others real estate objects.
This will lead to the fact that by approximately 2024 in Russia there will be a complete transition to calculating property taxes on organizations based on cadastral value. Currently, only retail and office buildings or premises are taxed “according to the cadastre”, and warehouse and industrial facilities - based on the residual book value.
The amendments to the law also included the deadline for making a decision on conducting a cadastral valuation. According to the new requirements, the rule is established in law that “the decision to hold the next state bond is made by the subject no later than six months before January 1 of the year of the future assessment.” That is, before July 1 of the current year, the subject must decide on the cadastral valuation procedure in the next year.
In addition, the range of information sources for assessment has been expanded. State Budgetary Institutions received the right to request information about the objects being assessed, on the basis of which the cadastral assessment was made, not only from official sources, but also from organizations managing apartment buildings, resource supply companies, organizations that carried out technical accounting until 2013 (PIB, GUION).
By 2024, Russia will undergo a complete transition to calculating property taxes on organizations based on cadastral value
These organizations are required to provide the requested information free of charge within 20 days. The State Budgetary Institution also has the right to request information about the boundaries of zones with special conditions for the use of territories.
If it is impossible to further use for its intended purpose a particular property located in a zone with special conditions, the owner of this property has the right to demand that the enterprise buy out such property. Also, data on this must be provided to the State Budgetary Institution, since they directly affect the cadastral value of the property and must be taken into account when carrying out state tax assessments.
The next amendment to the law prescribes pricing factors affecting the cadastral value of real estate. Location, year of construction, wall material, series of apartment building, whether the property is in dilapidated or disrepair, as well as a number of other factors will now necessarily be taken into account when conducting a cadastral assessment. Failure to take into account such factors is an absolute basis for revising the cadastral value in the event that an interested party applies to the State Budgetary Institution.
The period for consideration of a preliminary cadastral valuation report is reduced from 50 to 30 days from the date of its publication. At the same time, the range of channels for providing information about the property is expanding. With the introduction of the new law, the extensive network of MFCs will have the right to accept such comments and comments.
And, perhaps, the most important amendments. After the new rules come into force, owners will have fewer opportunities to establish the market value of real estate as a cadastral value.
Firstly, the law states that if the cadastral value is reduced by correcting errors, then its corrected value will be applied from the moment the disputed value is established. And for the entire period of validity of the new cadastral valuation, the owner can receive a refund or credit for all overpaid property taxes. Changing the cadastral value by correcting errors made during GKOs is retrospective in nature in terms of taxes.
Secondly, any interested person can correct an error in the State Property Bill, regardless of ownership and the date of submission of comments to the State Budgetary Institution. Only the owner of the property can establish the market value as a cadastral value.
Thirdly, the decision to establish the market value as a cadastral value can be challenged by municipal or regional authorities in court if their interests are affected, including in terms of taxation.
taxes. If someone “agreed” with the State Budgetary Institution to establish the market value as the cadastral value, then, according to the amendments to the law, municipal and regional authorities can challenge this decision in court due to tax arrears.
Market value of the property
The market value of a property is nothing more than its most likely price when sold on the open market under real competition. Unlike the cadastral value, the market value is established not by the state, but by its owner, realtor or professional appraiser, who can be hired at the initiative of any of the parties to the transaction. Those. If you need a report on the market value of a property, just contact an appraisal organization or a private practice specialist. A mandatory requirement for an appraiser is to have current membership in the relevant SRO and insured liability, and the form of activity does not matter (individual entrepreneur or employee of a legal entity).
Another fundamental difference between cadastral value and market value is that when calculating the market value of a property, an individual method is used, versus the method of mass analysis for state cadastral valuation. Despite the fact that the approach is the same as in the first case, any one can be chosen (cost-based, comparative, profitable, etc.).
The key point is that when determining the market value of a property, the interests of the buyer and seller are equally taken into account: one is interested in selling the product at the highest possible price (to make a profit), the other seeks to purchase the product at a favorable price, preferably the minimum. Those. the price set in market conditions balances supply and demand and is a compromise between seller and buyer.
The difference between cadastral value and market value
The first thing that can be noted when talking about the difference between cadastral value and market value is, of course, the scope of application of the data obtained. As we mentioned earlier, the cadastral value is used for taxation, and the market value is used to carry out the purchase and sale transaction of an object. It is also worth noting the radically different factors involved in the formation of value.
Cadastral value
So, to determine the cadastral value, the following must be taken into account:
- physical properties of the object (age, material, wear resistance, etc.);
- technical and operational characteristics of the facility;
- presence (or absence) of engineering and transport infrastructure;
- characteristics of nearby territories (their degree of development);
- the presence of relief (land), which can affect the cost;
- integral internal equipment, without which the operation of the facility is impossible or significantly difficult, taking into account the type of its use (for capital construction projects).
When calculating the cadastral value, the following is NOT taken into account:
- landscaping (coverings, small architectural solutions, etc.);
- improvements to the land plot (even those included in cadastral or accounting records);
- landscaping;
- movable property (temporary buildings, kiosks, sheds, etc.);
- objects located outside the boundaries of the object;
- objects of decorative and applied art;
- business activity carried out within the boundaries of the assessment object.
Market price
The market value is formed by a lot of factors, including those that are not taken into account when calculating the cadastral value, to the point that the view from the window affects the price of the object. The market value is also influenced by the exchange rate, demand, seasonality, etc. The differentiation between cadastral and market prices can be summarized as follows: of course, the market value of an object can be considered more flexible and objective, but do not forget that it is largely influenced by the condition market, and the cadastral one - the regional economy.
Policy to equalize cadastral and market values
When the bias in the application of old methods for calculating the cadastral value of real estate was revealed (it often exceeded the market value), the government, with the participation of Rosreestr, developed a new regulatory framework to resolve this issue. Now the cadastral value of the property is as close as possible to the market value, but in no case exceeds it; this is strictly regulated by law. The cadastral value is reviewed every three years (in federal cities every two years), and extraordinary recalculations are possible.
An extraordinary cadastral assessment may be carried out if an error is detected when calculating the cadastral value of an object. To monitor erroneous calculations, real estate market indices have been introduced (Order of the Ministry of Economic Development of Russia dated May 29, 2019 No. 302). Also, the cadastral value of an object can be challenged administratively or judicially. To do this, the property owner must contact the local state budgetary institution authorized to conduct state cadastral valuation, or the court. Moreover, to go to court, it is not necessary to first contact a budget institution.
Of course, the policy for calculating the cadastral value of real estate is becoming much more flexible and closer to the conditions of the real market, but we should not forget about the purposes for which it is used. Agree that paying tax for expensive repairs or adequate neighbors (which is included in the market value) is at least illogical.
Where can I challenge the cadastral value?
The cadastral value can be challenged both judicially and administratively. That is, you can immediately go to both the court and the commission for resolving disputes about the results of determining the cadastral value (Clause 1, Article 22 of Law No. 237-FZ).
As we have already noted, from January 1, 2023, new rules for appealing the cadastral value will come into effect: you first need to apply for a revision of the cadastral value to a special budget institution. Some regions may start working in a new way earlier. On the website of the regional department of Rosreestr there is information about the introduction of the new procedure.
Therefore, for such regions there is a pre-trial appeal procedure.
