Market value and cadastral value are two different concepts used in the field of property valuation and tax administration. The differences between these two terms are described below:
Market Value:
- Definition:
- Market value is the estimated price at which a property could be bought or sold in an open and competitive market, without external influences or pressures.
- Determination:
- It is determined through market analysis, comparison with similar properties that have recently sold and consideration of economic and supply and demand conditions in the area.
- Fluctuations:
- It may change over time due to changes in the real estate market, improvements made to the property, economic conditions and other factors.
- Primary Use:
- It is used for purchase and sale transactions, ratings property, investment decisions and to establish the market price in the real estate sector.
- Responsibility:
- Generally, it is the responsibility of real estate appraisers or real estate agents to carry out market valuations based on a detailed analysis.
Cadastral Value:
- Definition:
- The cadastral value is the value assigned to a property by the tax administration for fiscal purposes. It is used as the basis for calculating property taxes, such as property tax.
- Determination:
- It is determined through the application of formulas and methods established by the tax authorities. It may include factors such as the location of the property, size of the land and buildings, among others.
- Upgrades:
- It is usually reviewed and updated periodically by the tax authorities to reflect changes in the property market and in the area in which the property is located.
- Primary Use:
- It is used primarily for tax purposes to calculate property taxes and does not necessarily reflect current market value.
- Responsibility:
- The determination of the cadastral value is the responsibility of the local or national tax administration.
Main Differences:
- Purpose:
- The market value focuses on the price a property could fetch in a purchase and sale transaction, while the cadastral value is oriented towards tax collection.
- Determination:
- The market value is based on the analysis of the real estate market and comparable transactions, while the cadastral value is determined according to criteria established by the tax authorities.
- Update Frequency:
- The market value may change more frequently due to market conditions, whereas the cadastral value is updated periodically, usually every few years.
- Responsibility:
- Property surveyors and agents are responsible for determining the market value, while the tax authorities are responsible for establishing the cadastral value.
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