Assessment of land for inclusion in the cadastre is regulated by the activities of authorities on the basis of the Land Code of the Russian Federation, which includes a whole range of comparative, costly and profitable approaches. By cadastral valuation it is customary to understand a whole complex of administrative and technical actions, as a result of which the cadastral value of the land plot as of the valuation date is obtained. Using this procedure, the market value of a specific territorial unit is calculated taking into account current prices for similar land plots. The resulting figure should not exceed the price level in the market. However, to date, the cadastral value does not always comply with regulatory valuation rules. Quite widespread are cases where this indicator significantly exceeds market value, which imposes a rather heavy tax burden on the land owner.
In accordance with the legislation, the established cadastral value serves as a standard and is subject to mandatory use. The contestation of the cadastral value of a land plot is carried out exclusively in a special order in full accordance with current legislation.
How it's done?
When it comes to such a complex process, you should contact a specialized agency that will take care of all these issues. Challenging the cadastral value of the land usually begins with an independent assessment, and after that the client is provided with a report on the study and the results obtained. The cost of such a service consists of a number of factors, in particular, drawing up a report and obtaining an expert opinion in the SRO for a document containing a land valuation report.
The severity of the tax burden
According to the Tax Code of the Russian Federation, the calculation of the tax base is interrelated with the cadastral value of the land, however, do not think that the taxpayer is subject to the actual tax burden, which depends solely on the result of the state assessment. The tax code spells out the maximum land tax rate , which is 0.3% in relation to land:
- reckoned to agricultural territories or to lands included in agricultural zones in settlements;
- occupied by infrastructure facilities of engineering networks of housing and communal services and housing stock, or acquired for housing construction;
- acquired for personal gardening, subsidiary plots, animal husbandry or horticulture, as well as summer cottages.
In relation to other lands and plots, the rate is a maximum of 1.5% of the cadastral value.
The amount of tax that taxpayers must pay is calculated by local governments. As prescribed by Article 387 of the Tax Code of the Russian Federation, representative bodies determine tax rates, as well as the procedure and deadline for their payment. Including for certain categories of taxpayers the size of the tax-free amount is established. The Tax Code also states that the tax should be established taking into account the taxpayer’s ability to pay after the fact.
The need to challenge
Challenging the cadastral value of a land plot is sometimes required if incorrect pricing has led to an increase in the tax burden. In recent years, many owners of land and real estate have paid attention to the increase in the amount of taxes that must be paid.
In connection with what increased tax liabilities? First you need to remember how exactly the amount of property tax is determined. It is calculated based on the results of the tax period in the form of a product of the corresponding tax rate and base, which is determined for the specified period. The payer cannot directly affect the rate, but in the case of the tax base, the situation is completely different.
Earlier, the tax calculation base for real estate of organizations was calculated as the average annual value, but now certain amendments have been made to the legislation, which has led to a ban on this approach. Now, to calculate the tax base, the cadastral value of the property, which is approved in the prescribed manner, is used. This is used in relation to such types of real estate organizations that are recognized as objects of taxation:
- trade and administrative-business, as well as premises inside them;
- non-residential premises intended for offices, catering, trade, consumer services, or actually used for the above purposes;
- real estate owned by foreign organizations that do not carry out activities in the Russian Federation through permanent missions, as well as real estate of foreign companies that are not related to the activities of these structures in the Russian Federation.
In relation to land plots it is determined that for taxation it is required to determine the value of land by cadastre. That is why for plots located within the municipality in whose territory the land tax is practiced , the cadastral value of the property acts as the tax base.
In relation to the real estate of individuals - premises and houses, garages, parking lots, construction in progress, immovable complexes, other structures, buildings and premises, including commercial property - the property tax of individuals is calculated in a different manner, at the same time, it is determined on the basis of the cadastral value of the object, although the inventory was previously used. The same approach will be used for calculating the tax on housing facilities located on land plots that are provided for cottage, personal subsidiary plots, as well as gardening, gardening, and individual housing construction.
Challenge process
In connection with all these circumstances, it may be necessary to challenge the cadastral value of real estate. To begin with, it must be pointed out that the rights of a person who are violated as a result of the discrepancy between the value of the property actually available on the market entered in the state cadastre can be protected only by making corrections to the state cadastre.
Imagine some statistics. The practice of contesting the cadastral value indicates that over the nine months of 2014 more than 12 thousand claims were filed with all courts of the Russian Federation, involving disputes regarding the amount of real estate cadastral value entered into the state register regarding twenty-four thousand objects. As a result of the consideration of these disputes, approximately seven thousand claims were satisfied, which makes up five percent of the total, the rest are either still pending, or they were refused. All these data speak only about one thing - contesting the cadastral value of land is a necessary action if it is not correctly determined.
From the point of view of taxpayers, it is important to see the effect of such proceedings. Positive court decisions in favor of the plaintiffs led to a decrease in the tax base by approximately 93.5%. According to Russian law, the results of the cadastral value recalculation are allowed to be challenged in court for consideration of relevant disputes:
- by individuals, if the results obtained relate to their rights and obligations;
- legal entities, if the results obtained relate to their rights and obligations;
- bodies of local self-government and state power in relation to real estate objects that are in municipal or state ownership.
That is, the commission on contesting the cadastral value will consider applications from interested persons, owners or tenants of real estate.
Pretrial Challenge
In order to challenge the determination of value obtained in court for individuals, it is not necessary to first contact the commission. For legal entities, there is no unambiguous algorithm of actions in this situation. Judicial contestation of the cadastral value in this case may be carried out by the interested person. Legal entities are encouraged to go to court in a very specific case. If the commission challenging the cadastral value rejected the application for review, you can contact the higher authority, in particular, the court. It turns out that for legal entities it is absolutely not necessary to adhere to the existing pre-trial order.
If we are talking about applying to the commission, then we need to submit a statement of claim challenging the cadastral value with the relevant documents that are required for revision. At each administration of Rosreestr, commissions are created and function. It should be understood that contesting the cadastral value of real estate involves filing an application within a period of not more than five years from the moment the data are entered into the state cadastre.
If the basis for submitting an application is the inaccuracy of information on an immovable object used in the process of determining the value of an inventory, then the commission has the right to make one of the following decisions:
- on the rejection of the application for the revision of value in the event that the information on the property used in the process was reliable;
- on the revision of the results in the case of the use of false information used in the process of calculating the value of the inventory.
If the contestation of the cadastral value of the land is connected with the establishment of the value of the object on the market in the report, the commission will take the following decision: the cadastral value will be considered equal to the market value or the claim will be rejected completely. In court, it is allowed to challenge decisions taken by the commission. In this case, the applicants' claims will be considered without taking into account decisions previously made by the aforementioned commission.
Court order
It is worth noting that at the moment the contestation of the cadastral value in court is not the same as before. Since August 6, 2014, such cases have ceased to be considered in the jurisdictional arbitration courts, and turned out to be the patrimony of the courts of general jurisdiction, therefore they were referred to the regional, regional, city and federal courts.
It was already mentioned earlier that the judicial contest of cadastral value is now available to individuals and legal entities, as well as to authorities. In such disputes, the territorial authorities of Rosreestr and the Federal State Budgetary Institution for the constituent entities of the Russian Federation act as defendants. Executive bodies of the constituent entities of the Federation or local self-government bodies that ordered work to calculate the cost of the site may act as co-defendants or third parties in such cases.
Challenging the cadastral value of a building may be based on:
- entering in the register inaccurate data about the object that was used in the process of determining the value of the inventory;
- the establishment in relation to the real estate object of its value in the market on the date according to which the determination of the value of the inventory was made (in this case, the determination of the value of the object in the market should be made on the same date that was used to determine the value of the inventory)
Review of evaluation results
In order to determine the grounds for the recalculation of results, the applicant has the right to contact the customer in the event that the determination of the value of the cadastral object is related to a state valuation or to the body entrusted with the state valuation functions, if it concerns newly recorded real estate objects. A similar situation applies to objects that have changed their qualitative or quantitative characteristics, which is why they are entered into the state register again.
If the contestation of the cadastral value of a building, land plot or other type of real estate begins, then within seven days from the receipt of this request, the applicant must receive relevant information from the customer of the work and the authority that was charged with determining the cadastral value. In addition, citizens have the right to access the services of the AIS of the state cadastral valuation fund.
Requirements for Defendants
- Challenging the cadastral value of the land or building suggests that the information in the state cadastre will be invalid.
- The responsibility of the defendant after this will be to amend the state cadastre.
- The valuation to contest the cadastral value serves as the basis for the defendant to establish a new value equal to the market value of the property.
- The state accounting authority is obliged to enter into the state cadastre information about the new value of the property, equal to its value in the market.
Used base
Challenging the cadastral value of the land suggests that the review process complies with the general rules of the lawsuit, which include rules for the distribution of the evidentiary burden between the defendant and the plaintiff.
If the plaintiff demands to review the cadastral value and equalize it with the market value, then he must prove that at the date of valuation of his plot there was a different value in the market.
The court may decide that the cadastral value will be established on the date that corresponds to the market valuation. The basis for determining market value is the federal law on valuation activities through the appraiser and the preparation of a report. This report will become one of the admissible evidence of ongoing disputes in court, where it will be examined for compliance with legal requirements and federal assessment standards.
If the basis for filing a claim for the revision of the cadastral value of real estate is the market value set in relation to the object, then an independent expert must be ordered in advance to assess it. It will be carried out according to the agreement between the customer and the appraiser. The result is a report on market value, which must be included in the statement of claim on the revision of the value of the inventory.
Results and Solution
The court must reflect the results of the assessment of evidence of the decision, which will give reasons for accepting evidence as a means of substantiating judicial conclusions. Other evidence may be rejected by the court. And the grounds, according to which some evidence was preferred, should also be necessarily reflected in the final documentation.
So, if the procedure for contesting the cadastral value has been followed, and as a result of the judicial review, it has been established that the value of the property owned by the plaintiff contained in the cadastre does not correspond to the current value in the market, which was determined on the same date, the court will satisfy the plaintiff's claims. As a result of a court decision, a new inventory value will be set. Now you know how cases of contesting cadastral value are considered.