Valuation Of Lands in Ukraine

What is that all about:

1. What kind of land valuation you need: expert or normative

1.1. Where to get the normative valuation of the plot

2. How much does the service of expert valuation of the cost of land plots cost

2.1. What documents you have to provide to land appraiser

2.2. How to make an expert valuation if there is no documents

3. How the market value of land is determined

3.1. Features of valuatino of plots for a notary

4. What taxes must be paid when selling land

4.1. From what valuation you pay taxes: from regulatory or expert monetary

5. Land valuation for individuals

6. Land valuation for enterprises

1. What kind of land valuation you need: expert or normative

What is the difference between expert and normative valuation? Land valuation is divided into two types:

1. Expert monetary valuation. Most often, appraisers are asked for this service. Expert valuation implies the determination of the market value of plots. But the market value of the land is necessary for:
   • Re-registration of ownership on real estate at the notary.
   • Presentation in court in property disputes around land.
   • Accounting and tax.
2. Normative monetary valuation. This is a rather specific concept, which is a relic and stretches even from the time of the planned economy. The cost of plots is calculated according to different methods for human settlements, agricultural land, forest and so on. The result of such calculations using a large number of different factors is a certain value. Most often, this value has no relation to the market value. However, the results of normative land valuation are used, for example, to:
• Land tax determination.
• In some cases, to calculate the State duty on a change, gift or inheritance.
• When determining the amount of rent for the use of plots in State or communal property.

Differences between expert and normative valuation are described in Article 5 of Law of Ukraine «On Land Valuation».

1.1. Where to get the normative valuation of the plot

Most often, to obtain a certificate on the normative valuation of a land plot do not need to contact an appraiser. You can go to the state site of the Public Cadastral Map, find your site by its cadastral number and order an extract with a normative valuation.

It can be done remotely, very conveniently and quickly.

2. How much does the service of expert valuation of the cost of land plots cost

Above we have written that expert valuation is most often needed when re-registration of real estate at a notary and for use in court proceedings.

Despite the fact that in both cases the market value of the real estate is determined, the procedures for preparing documents for the court and for the notary are significantly different. That is why the prices of our services vary depending on the purpose of the work.

• Expert valuation of the land for the notary. The cost of the service is 1000 UAH, performed in one day.

• Determining the value of the plot for the court. The cost of the service from 2500 UAH and is determined individually. Depending on the characteristics of the plot and availability of the customer a full set of documents. Time of execution from two days.

2.1. What documents you have to provide to land appraiser

In most cases, the land appraiser will need only a document which is confirming the ownership.

A few years ago, the most common type of such documents were state acts on the right of ownership of land. Now these documents are no longer issued, but they still confirm ownership along with newer contracts of sale, gift and so on. Also, an extract from the register of property rights to the real estate is suitable for carrying out the valuation of the land plot.

If you have relatively old documents on your hands, please note that they include the cadastral number of the land plot. If it is not there, the notary will not be able to carry out the transaction. It is not difficult to get the cadastral number, but this is a separate procedure. It is managed by private land management organizations that can easily be found on the Internet.

2.2. How to make an expert valuation if there is no documents

In practice, our appraisers are often faced with situations when you need an expert valuation of the land, but the customer does not have documents proving ownership.

The most common example. In divorce a plot is a joint property and disputed property. However, one of the spouses does not provide copies of documents on the real estate in order to prevent the other party in any way to prove their position in the legal dispute.

This position is not unusual, and the situation has its own practical solution. If you have such circumstances, you are welcome to call us. Our land appraisers will advise on the solution depending on the characteristics of the site and the data about it, which either are available from the customer or can be obtained from open sources.

3. How the market value of land is determined

There are different approaches and methods to calculate the market value of the land. However, in the absolute majority of cases, everything is very simple. Your land plot costs about the same as you can buy land with the most similar characteristics.

The market value of land is based on these basic factors:

• location (position in the area of transport accessibility, remoteness or proximity to the infrastructure of the locality);
• legal regime of the land parcel (purpose);
• the availability of utilities;
• physical characteristics (size and configuration);
• terms of sale (free or urgent (forced) sale).

Of course, if we are talking about the valuation of «cottage’s» plots in the field, which have recently been «cut», then here everything is simple and unambiguous. As a rule, in this area there are a sufficient number of offers to sell exactly the same objects. Accordingly, it is not difficult to determine the value of our plot.

More difficult is the siteation with the expert valuation of atypical plots. For example, plots under individual residential buildings in Kyiv, where there may simply be no offer to sell empty land. It is also difficult to assess facilities for industrial or other special commercial purposes. Our appraisers have sufficient experience of such «atypical» works, so we are sure we will deal with your task.

There is sometimes a need to determine the market value of leasehold rights rather than land ownership. An example of such work could be the lease of a coastal strip between a private house and a water body. Under the Act, such land could not be privatized, and therefore only leases could be issued. The presence of such a «bonus» as access to water, certainly positively affects the cost of home ownership. Therefore, in case of litigation, the appraiser has the task to determine not only the market value of the house (land + house), but also the cost of the right to rent an additional plot.

3.1. Features of valuatino of plots for a notary

Taxes and mandatory payments for land re-registration are calculated based on the price specified in the sales contract. However, not less than the estimated value of the plot, which is registered in the unified state «appraisal» register.

It is interesting to mention the state database of reports of appraisers. It is necessary to clarify the situation for customers.

In Ukraine exists an automatic program-register, which automatically determines the cost of almost all types of real estate, including land. The valuation for the notary is recorded in this database. In this case, the value obtained by the land valuer should be within 25% of the automatically defined value.

Unfortunately, it is not uncommon for the registry to automatically form a value that is exaggerated several times. Our land appraisers value their reputation. Therefore, in case of such cases, we inform the customer in advance about such a problem and advise on its solution. We do not put the person before the fact that the work has already been done and the overvalued value of the land entered in the register.

4. What taxes must be paid when selling land

There are certain conditions for the sale of land. If you include them, you can sell your property without paying a penny of tax or a mandatory payment. These conditions (norms) are detailed in article 121 of the Land Code. These include site basic parameters such as area and purpose. It is also important to know that these rules also fall under the terms of land ownership (less than or more than three years), as well as the number of sales transactions for one year (paragraph 172.1 of the Tax Code of Ukraine). According to this item, income received from the sale or exchange is not taxed more than once during the reporting tax year.

What are these mandatory conditions (norms) we will consider in tabular form:

If any of the above conditions is not met, then the sale will fall under 5% Personal Income Tax (PIT) and 1.5% Military Fee, which the seller will have to pay.

It should be noted that in real estate re-registration usually there is also a pension fee, but the situation with the land is different – you do not need to pay anything! Because according to Tax Code para. 138.3.3 the plots do not fall under the definition of real estate (do not refer to buildings). And in the Law of Ukraine «Pro fee for mandatory state pension insurance», pension fee is charged only with that property, which is listed in the Tax Code. So this mandatory payment can be forgotten 🙂

4.1. From what valuation you pay taxes: from regulatory or expert monetary

We will consider for what purpose these types of valuations are needed and when.

The most common case of application of expert land valuation is the registration of a notary’s purchase and sale contract. Taxes and mandatory payments will have to be paid based on the price specified in the sales contract. But not below the market value, which will determine the appraiser.

Also, expert monetary valuation is needed for land plots, which are in the state or municipal property (article 13, part 2 of «About land valuation»). It is used in cases of sale, insurance, transfer to mortgage, when entering a plot in the charter fund of an economic company, in reorganization, bankruptcy or liquidation of an enterprise, determination of the amount of damage to owners, as well as by court decision.

Normative monetary valuation is commonly used to determine the rent on State and communal land and to calculate land tax.

5. Land valuation for individuals

The most common case, when it is necessary to appeal to the land appraiser, is the purchase and sale of real estate. Most people are accustomed to believe that real estate is called a variety of buildings on the site. In fact, by definition, real estate is primarily land, whether or not there are improvements. It is important to note that in most cases of sale of residential or dacha houses, the notary will require you to provide two separate documents: on the land and on the house. This is due to the fact that in our country the title documents for the buildings and the plot live as if separate from each other (two different documents). From this rule, but there are exceptions. You can read about them in our article about, where land valuation may be optional.

So, individuals order this service most often for such purposes:

• for purchase and sale deals, gifts, civil contracts of other types (for example, lifetime maintenance);
• in the execution of inheritance, both in the standard notarial procedure and through the court decision;
• for presentation in court (in cases of property disputes for the division of property and payment of court fees);
• transfering of land on pledge (mortgage);

6. Land valuation for enterprises

Working with a legal entity in the context of an expert money valuation of the land has a number of features. The specificity in this case is that the parameters of such land plots are very specific: non-standard purpose (commercial use), unique small plots in Kyiv for multi-storey residential development, etc. Also for legal persons it is often necessary to define the right to use the land that is used by the customer on the lease.

The legal entities order a service to determine the cost most often in such cases:

• civil contracts of all types (including lease agreements);
• for presentation in court (in cases of property disputes for the division of property and payment of court fees);
• transfering of land on pledge (mortgage);
• recording of land values and use rights in accounting (very often government agencies have this need);
• bankruptcy, liquidation or reorganization of an enterprise;
• formation of the authorized company fund;
• developing a business plan to attract investors.

What documents must be submitted to a legal entity? Everything is simple: title documents and any registration document for the customer. When carrying out an expert valuation of the rights to land owned by State enterprises, the package of documents is determined individually.

You are welcome to contact with us any time! We will be glad to see you among our favorite clients!