The obligation to conduct the valuation of the property was established by Art. 7 of the Law of Ukraine “On the valuation of property, property rights and professional valuation activity” of 12.07.2001, № 2658-III (hereinafter − Law on Evaluation). The most frequent case of valuation for individuals is the taxation of property. The cases when the property valuation is necessary and who has the right to implement it are in the following.
Determination of valuation cost
In all cases of the transfer of ownership on item of immovable property, except in the case of inheritance of family members the first-degree relatives of the testator, it is necessary to determine the valuation cost of the property, since, according to para. 172.3 of Art. 172 of the Tax Code of Ukraine as of 02.12.2010 № 2755-VI (hereinafter − NCU), income from the sale of the property is determined on the basis of the price specified in the contract of sale, but not below the valuation cost of such an object calculated by the body authorized to perform such a valuation in accordance with the law.
When taxation of the income from the sale of items of immovable property, a comparison of the price and the estimated value takes place the aim of determining the tax base for individual income from the sale of immovable property. Based on the results of such a comparison, the valuation cost is used as a tax base only if it exceeds the price specified in the contract of sale. That is, the principle of “use what is more” is in effect.
Who has the right to valuate?
In accordance with the Resolution of the Cabinet of Ministers of Ukraine “On the valuation for Tax Purposes and Charges and Payment of Other Compulsory Payments Collected in Accordance with Legislation” of August 21, 2014, № 358 (hereinafter – Resolution № 358), the valuation of the item for tax purposes should be carried out exclusively by entities of valuation activities that meet the requirements of the Law on valuation. Such correspondence is confirmed by the current certificate of the subject of valuation activity, issued by the State Property Fund of Ukraine, and the availability of information about such entity in the State Register of valuators and subjects of valuation activity.
Subjects of valuation activities in the field of land valuation, in turn, must meet the criteria applicable to them by Art.6 of the Law of Ukraine “On Land Valuation” of 11.12.2003, № 1378-ІV.
Property Valuation
Property valuation is carried out on the basis of a contract for property valuation concluded between the subject of valuation activity and the customer of the valuation and setting the price for valuation services. Customers can only be persons to whom the mentioned above property belongs or is legally in their possession, as well as those who order the valuation of property on behalf of the mentioned persons.
The following documents should be transferred by the customer of the valuation to the subject of valuation activity in order to conduct the valuation of immovable property:
1. A document certifying the ownership of immovable property (purchase and sale agreement, barter, gift, certificate of ownership, court decision, state act on the right of ownership of a land plot, etc.);
2. Technical passport for of immovable property;
3. Passport of the owner (for the conclusion of the contract for the valuation and verification of the eligibility of the evaluation order).
Information that the valuation report should contain
The information from the property valuation report, the report on the expert monetary valuation of land plots drawn up for tax purposes, should be entered unimpeded and free of charge to the unified database of evaluation reports in the form established by the State Property Fund of Ukraine. This norm is mandatory in accordance with paragraph 1 of the Resolution № 358. In addition, this form with a unique number is an appendix to the report and is used by a notary to verify the fact of entering information from the property valuation report into the unified report database. Therefore, the customers of the valuation when accepting services should make sure that an appendix to the report is attached to the property valuation report.
One of the defining characteristics of the valuation report is its validity. In most cases, the valuator marks such information in the document itself, in particular, in the conclusion about the value of the valuation object. However, in accordance with paragraph 1 of Resolution №358, the validity of the valuation report should not be more than six months from the date of valuation. Therefore, clients should clearly record in the contract for the valuation of property, information on the desired valuation date, as well as the validity of the report. Such attentiveness will make it impossible for the report to expire before the notarization of the transfer of ownership on immovable property.
In the event of the loss of the evaluation report, it is possible to obtain a second copy from the evaluation subject, since the documents for determining the evaluation cost of the valuation object are stored in the archive of the valuation subject in hard copy or soft copy for at least one year. Receipt of the second copy of the report is not free of charge, if such an opportunity is prescribed in the contract for evaluation.
If the valuation client has grounds for dissatisfaction with the services of the valuator and the conclusion on the value of the property, he/she has the right to initiate a review of the property valuation report, which is provided for by Art.13 of the Law on Evaluation.
