Real estate experts strongly advise to challenge cadastral value of commercial property

According to the RF tax code amendments, introduced last year, property tax is now calculated based on the property cadastral value and not on balance value, as it used to be. This change resulted in increase of a commercial property tax in 3-5 times. Experts from NAI Becar and VEGAS LEX shared their experience about possibilities to reduce property tax at the seminar “Property tax: how to challenge cadastral value of commercial premises” on March 27, 2015. The event was organized by Academy of Real Estate (ARE) and the Russian Guild of Property Managers and Developers.
The experts unanimously agreed that it is important to know and to challenge cadastral value, in case it exceeds the market value. For example, underground parking space produces lower profit than retail or office premises. Consequently, different types of commercial spaces mustn’t be valued equally. There are plenty of similar examples, which make landlords challenge cadastral value of their buildings. There are 2 ways to do it: invite commission or go to the court. According to Rosreestr during the previous year retail and office buildings got 30% of favorable decisions in the court and land plots – 20%.
Success in challenging of cadastral value can be reached by joint work of lawyers, appraisers and management company. According to Maria Onuchina, managing company has to be actively involved in the procedure, as it is aware of all the building peculiarities.