Unified database of property valuation reports: what real estate sellers need to know

Since July of this year, in Ukraine a single database of reports on property valuation with the module of electronic determination of appraised value started to operate: from now on, it became impossible to understate the value of real estate or avoid paying taxes. The State Property Fund of Ukraine (SPFU) has high hopes for a Single base-the innovation should bring out of the shadows and send billions of hryvnia to the state budget.

It is clear that the novelty of the SPFU was not liked by everyone, so even before the start of the work of the Unified base, numerous attempts were made to outwit it or at least discredit it with the help of “revealing” materials in some media.

Let’s try to explain how the launch of a Unified database will affect real estate sellers, appraisers and notaries and why Ukrainians will have to pay more.

What is the purpose of creating a unified database of property valuation reports.

What is the Unified data base and why it was created will become clear after a brief digression into the history of the issue.

Previously, for any transaction with real estate-sale, inheritance, obtaining a loan secured by real estate, etc. — it was necessary to assess such property by an independent appraiser. Thus check of reports of subjects of estimated activity was not carried out in an automatic mode therefore there was a big field for frauds-both for understatement, and for increase in cost of property. From the value of the object, which was determined by an independent assessment, the state was paid a tax. Often both the seller, and the buyer, and even the appraiser were interested in underestimating the real value of the property — the first two paid lower taxes, the appraiser received his «small share» for falsifying the report. Understating the value of property reduced the amount of tax on personal income, military duty, and also helped in the care of financial monitoring of settlements in a non-cash way.

Of course, this did not suit the SPFU, because the interested parties decided matters in their favor, using imperfect legislation, and most importantly — did not share money with the state. SPFU claims that because of collusion of sellers, buyers and appraisers by the budget annually passed 2-3 billion UAH. Therefore, all levers were used to close the gaps: amendments were made to the Tax Code, the necessary software was developed in the Fund, horror stories were distributed in the media for those wishing to avoid paying taxes in full in the future. Valuation of property, registration of transactions, payment of taxes-all this remains as it was, the changes primarily relate to the procedure for checking and registering the report of appraisers and notaries. But the ultimate goal is to increase state budget revenues.

In fact, a single database and evaluation Module is nothing more than a technology to force citizens to pay large amounts of taxes, and appraisers-to work within the framework of the legislation and sleep peacefully, because from now on the SPFU will automatically monitor the work of appraisers. In case of gross and systematic violations or facts of falsification of reports of subjects of appraisal activity will be deprived of the corresponding license. That is, to persuade the appraiser to underestimate the real value of the property will become more difficult and more expensive, if someone wants to risk work and even freedom for the sake of falsifying reports.

How it works

First of all, it is necessary to know that the unified reporting assessment database and the cost assessment Module are elements of the same system, but only employees of the SPFU have access to the module, while third-party organizations can work with the Unified database. Reports of appraisers are entered into the Database, registered and stored-this is done by both appraisers and notaries, and the Module automatically checks the submitted reports for compliance with the data on the value of property embedded in it. Simply speaking: Module will notice and turn back understated property, in turn, the Unified database simply shall not register property valuation report rejected by the Module. This will be repeated each time until the property value in the appraiser’s report matches the property value calculations laid down in the module. Only after registration of the report of the appraiser in a Single database alienation operations can be carried out with the property.

Electronic platforms

Evaluation reports are submitted to a Single database through independent electronic platforms — this service for a certain amount of money can be provided by any organization that has received authorization of the state property Fund.

It is almost impossible to break the Module or gain unauthorized access to the Unified database: the authorization procedure of the electronic platform provides, among other things, the mandatory presence of a potential operator of such a platform of a complex information protection system with confirmed compliance according to the law of Ukraine «on information protection in information and telecommunication systems». In other words, the electronic platform will not be authorized if it is not maximally protected from hackers ‘ interference.

By now the Fund has authorized only one electronic platform — «assessment.online”. All reports on the assessment of alienated property are submitted through it. The monopoly of this electronic platform will be not long — Fund has already accepted documents for authorization from three more potential operators: electronic platforms «PROFESSIONAL EVALUATION”, PRESS EVALUATION» and «EVALUATION REGISTER». Authorization of these sites will be carried out after receipt of certificates of conformity from the state special service. Almost ten more electronic platforms are expected to be authorized within the next three months.

The more electronic platforms — the more competition and lower price. Now the fee for filing and registration of the report equals to 390 UAH., with the launch of new sites, prices for such a service may decrease. However, this is a very small amount compared to the amount that will need to be paid to the state in the form of taxes for profits derived from the sale of real estate or inheritance. Actually, in order to receive taxes in larger volumes than before, a single database of property valuation reports was created with the module of electronic valuation determination.

First results of the Unified database

The state property Fund of Ukraine informed prm.ua in, as of July 27, 2018, the Unified database of valuation reports after its commissioning by the subjects of valuation activities included information on more than 7 000 reports on the valuation of property for the purpose of their registration. And even with such a small number of reports filed, there are already intentions to falsify and understate the real value of the alienated property.

According to the head of the State Property Fund VitaliiTrubarov, for the first five days of the module and the new database of reports 417 objects totaling almost 135 million hryvnias were denied registration. The reason for the refusal was an underestimated estimated value of the property-appraisers underestimated the real value at least 2-3 times, and in some cases — ten times. Thus, the innovation from the first days proved to be effective. But time will show whether the budget will receive billions of hryvnias annually as SPFU expects.

Source: https://rb.gy/nzyi26