On Tuesday, 18 February, the government supported the draft Cabinet Regulation “Regulations Regarding Cadastral Assessment”, prepared by the Ministry of Justice, which will provide more fair calculation of cadastral values for immovable properties, starting as of 2021. At the same time, amendments to the procedure for determination of purposes of the immovable property and regulations on cadastral measurement of structures in relation to methodology for determination of depreciation of structures were supported.
The Minister of Justice Jānis Bordans emphasizes: “The improved methodology will ensure objective calculation of the cadastral value for each and every property, because inhabitants have to understand the real value of their properties and the State has to be aware of the total economic value of immovable properties. The new methodology eliminates the current shortages and provides effective procedures for determination of cadastral values.”
On 24 October 2019 the Saeima decided that the new cadastral values will be applied for calculation of the immovable property tax as of 1 January 2022. The Minister of Justice Jānis Bordans underlines: “All of us - inhabitants and the State - should have objective information available on the cadastral value for all immovable properties, however, application of the immovable property tax and increase of the tax burden with regard to the primary dwellings of inhabitants is not acceptable. Therefore, the Ministry of Justice considers that it is necessary to introduce the so called “non-taxable minimum for primary dwellings”.
The new regulations for the process of cadastral assessment plans to take into account the year of construction of the building, its type, type of use and place of location. They provide for publishing of broader information regarding the developed basis of cadastral value, including the used market transactions. Publishing of the estimated values before proclamation of the draft base of cadastral values is planned.
The new methodology provides that, when calculating the cadastral value, only those encumbrances, affecting the value of the immovable property will be taken into account, for example, for rural land - high voltage lines, road servitudes, especially protective nature territories etc.
In turn, the period of construction and depreciation of the building will significantly affect the value of the building and engineering structure. Depreciation of the building will be automatically recalculated every year. These changes will improve the compliance of new and renovated buildings with the real estate market.
The standard area will be determined for the building land, where apartment houses are located, which will depend on the intensity of building, and the rest of the area will be assessed as the green area. This improvement will improve assessments, when bigger land plots than necessary are attracted for the residential building and they are used by inhabitants of other houses.
The procedure for determination of purposes of use provides to additionally separate the building land, where the building is planned in the spatial planning, but a detailed planning as well as building of infrastructure is necessary for implementation of building.
The new methodology has improved the criteria for determination of the purpose of use of land, determining that a land plot, where building cannot be performed due to physical or legal circumstances, shall not be determined as the building land.
In order to ensure timely availability of information to public regarding the estimated cadastral values, the State Land Service will publish them on its website before announcement of the draft base of cadastral values.
Government shall approve the new base of cadastral values until August 2020, but it will be applied for calculation of the immovable property tax in 2022.