Property tax may increase for those who own expensive real estate

It was noted that on December 3, 2020, the presidential decree “On further improvement of resource taxes and property taxes” was adopted. According to the decree, during 2021-2024, it is planned to gradually introduce a system of calculating property and land taxes based on the cadastral value of real estate (buildings, structures and land plots) close to the market value.

Reportedly, according to the current evaluation mechanism, the cost of equal area of a one-room house built in a year in the center or near the metro and on the outskirts of the city is the same. In fact, the price of apartments in the real estate market varies greatly depending on their location. For example, the actual market value of the current cadastral value of real estate located in the center of Tashkent is higher by 4 times, and on the outskirts of the city – higher by 2 times.

“However, the current cadastral value does not correspond to the actual value of the object and it is socially unfair. Market value, on the other hand, allows for a more complete assessment of real estate, taking into account all of the above factors, which is essentially more fair, taking into account the specific characteristics of each object. There are major differences between the current cadastral value of real estate and the valuation of the market value,” Dilshod Sultanov said.

According to him, the taxation of real estate objects close to the market value means that if the rates are equal, a larger amount of tax is levied for the more expensive object. And the cadastral (not based on market value) or book value does not always reflect the true value of the object, which is especially noticeable in underdeveloped markets.

Introduction of the mechanism of calculation of the property tax and the land tax on the basis of the cadastral value of real estate objects close to the market value is carried out in two stages:

• the first stage (2021-2023) – for real estate objects of the housing stock (apartments, detached houses, country houses), as well as for the land plots occupied by these objects;
• the second stage (2022-2024) – individual objects of real estate in non-residential areas, as well as land plots occupied by these objects.

Based on the demand and supply of real estate objects formed in the market during 4 years, it is planned to evaluate the object on the basis of the construction cost (cost method) of the object in remote areas where there is no real estate market.

After receiving the initial results of the assessment, a dialogue will be held with the population to provide information about the process of real estate appraisal, the right to review the results of the appraisal and the possibility of its involvement.