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The new draft/ How the building tax will change, it will be calculated on market prices

2022-10-04 07:50:54Biznes SHKRUAR NGA REDAKSIA VOX

The new draft/ How the building tax will change, it will be calculated on market

The Ministry of Finance and Economy (MFE) is revising the decision of the methodology for calculating the tax value of the building. Minister of MFE Delina Ibrahimaj at the conference on the progress of the economy affirmed that for the property tax one of the proposals is to be taxed with the market value.

Monitor learns that the MFE has already started work on the next new draft for the changes to the building tax, which is expected to be ready next year. The new draft does not aim to change the tax level, which is 0.05% of the house's value, but the tax calculation base, which is the house's value.

The changes in the basis of tax calculation aim to align the level of taxation with the current prices of apartments, where in many areas of the capital, mainly new constructions have experienced high growth. Consequently, it is expected that to determine the value of the house, the prices according to the sale-purchase contracts registered in the State Cadastre Agency (ASHK) will be used.

Currently, in the absence of market prices, the average reference prices defined in Annex 1 of Decision No. 132 "On the methodology for determining the taxable value of real estate "buildings" are used to assess the building's tax base.

The value of the apartments is currently calculated with the fiscal reference prices per square meter, which are used by the Real Estate Registry Offices. In the annex to the decision, the average reference prices for the sale and purchase of buildings used for residential purposes are determined by city, while for Tirana the prices are divided into 32 cadastral areas.

According to the financial stability report of the Bank of Albania, the prices of apartments in the period January-June 2022 have increased by 28.4% compared to the 6-month period and 39% compared to a year ago. While the price index for sales in the capital registered an increase of 28.5% compared to the previous period and about 40% compared to a year ago.

The new draft will also define a new index for the taxation of land and agricultural land, which were not defined in the current decision.

The local government expert Agron Haxhimali told "Monitor" that if the basis for calculating the tax, which is the value of the house, changes, those who have property in the capital and the coast will pay more than currently, due to the increase in prices.

"Calculations based on the market without question, which means that those who own properties in urban areas on the coast and above all in the capital will pay more. As these areas are marking and imposing property value prices, as a result of market demand, but also for other factors, which require another analysis. Care should be taken regarding the truth of the real value, and the impact of the needy classes who live with a weak economy even in buildings, where the price of the area has a value different from the reference price".
According to Haxhimal, the changes in the calculation of the value of the house showed the dysfunction of the current system.

"First of all, this shows that the reforms and legal changes that were made for property taxation in 2018 were not well studied and analyzed, since after 4 years changes are required again. Secondly, it is and was when the property tax changes were made a matter of taxation on the real value of the property and not on the basis of the reference price. Thirdly, corrections are very well done, but it is important to build laws, mechanisms and instruments that will stand the test of time and no longer harm citizens in any aspect.

Taxation must certainly be fair and real for every asset of every category. Now there are several paths that lead us to real value taxation. The first is the statement itself, which I think hardly works, since no one wants and perhaps does not know the value of the property market. Another way is through verification from transactions, from notary and cadastre offices. But even here not everyone treats their property. Therefore, the other way is to determine again by the law, since it is difficult to determine the real value from the opinions and evaluations of third parties. Since this issue has now been reopened, first consultations and practices from other countries are needed. But it still needs adaptation to the local context", he asserted.

Example of how the building tax is calculated today

The annual property tax liability taking into account the assessed price for an apartment is calculated as follows: Annual tax liability = average reference price (according to the relevant city) x area (m²) x tax rate.

Referring to the table of annex 1 of the decision, the average fiscal price for the cadastral area 5/1, which is the area of ​​the former Block and University Library, the reference price is ALL 190,000/m2. The value of a house with an area of ​​100 m2 is 19,000,000 ALL. The tax is 0.05% of the value, i.e. 9,500 ALL per year. While the tax for privatized apartments, for which no sales transaction has been carried out, is calculated as 70% of the value.

For a family living in the city of Durrës, in a house with an area of ​​100 m2, the value of the house is calculated at 6,750,000 ALL. The fiscal price for this city is ALL 67,500/m2. The tax will be 0.05% of the value of the house, that is, 3375 ALL. But, in case citizens own a house, which was privatized by law no. 7652, dated 23.12.1992, the tax is calculated for 70% of the value./Monitor


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