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By the end of 2013, an expert opinion was indeed needed. At that time, property acquisition tax was also payable at a rate of 4%, but the authorities did not trust people and demanded an expert’s report with an appraisal price. They then compared the agreed price in the contract with the price in the expert’s report. The tax was then paid on the higher amount. This first changed so that for ordinary transfers of flats, houses, cottages, chalets or garages, an expert’s report was no longer needed, as the tax was calculated simply as 4% of the agreed purchase price. The only condition was that the purchase price was higher than 75% of the local normal price, which was verified by the tax office from price maps and other documents.
However, another significant change followed, namely the abolition of the property acquisition tax itself. This was abolished on 25 September 2020 and anyone who bought a property in December 2019 or later did not have to pay it.
Real Estate Purchase or Sale
We provide a complete package of legal services related to real estate sales and purchases, including reservation contracts and escrow services. We will also help you with all tax and land registry issues. Our work is fast and accurate, ensuring a worry-free transaction. You’re also welcome to pay after services are provided.
The need to have an expert report prepared
Other situations in which an expert report is required include legal proceedings such as insolvency and enforcement proceedings, or other court processes. In these cases, the creation of an expert report is even a legal obligation, and is commissioned by the party or person conducting the proceedings.
Less common cases involve the valuation of real estate belonging to commercial companies. For example, when real estate is contributed as a non-monetary contribution to a company, or in certain situations in mergers and acquisitions between companies, expert reports are required. These valuation reports also determine the value of the property for tax depreciation purposes, valuing the building and the land underneath it separately. An appraisal can also determine the value of the property for the division of co-ownership interests.
If you are buying a flat, house or land and financing it through a mortgage, you will need to have an expert’s report on the mortgage value of the property. This opinion is a key factor in determining the maximum amount the bank will be willing to lend you. Banks usually provide mortgage loans up to a maximum of 90% of the market value of the mortgaged property.
Who will prepare the appraisal?
To obtain a valuation report, for example for tax purposes when acquiring a property or when contributing to a company, you can contact a valuer directly or through valuation institutes specialising in economics.
In the case of court, execution and insolvency proceedings, expert reports are commissioned directly by the competent authorities. The courts usually commission the preparation of expert reports from experts registered with them. A list of accredited experts and expert institutes can be found on the website of the Ministry of Justice.
An expert is a person appointed by the Minister of Justice or by the President of a regional court authorised by him in a specific field. The Ministry of Justice and the courts carefully assess the expertise and qualifications of applicants.
Tip: In the judicial sector, there has been talk for some time about a shortage of expert witnesses and even a further decline in their number. Why is this so, how can an expert witness be useful to us and who can possibly replace them? This is the subject of a separate article.
Expert opinion vs. market price estimate
In practice, the difference between an estimate and an expert opinion is not very great. Both documents may offer similar prices and calculations. To get an indicative price for a property, an estimate is sufficient, which can be easily obtained online from appraisers. In more complicated situations, such as inheritance proceedings or obtaining a mortgage loan, at least standard market estimates are required.
An appraisal is used in more serious cases and serves as evidence in situations that are defined by law. From a formal point of view, an expert report is accepted in all situations and by all institutions. It is the only valuation document that bears the round stamp of the expert, which makes it the most expensive valuation document.
Therefore, an estimate of the market value of a property and a property appraisal may not be identical documents with identical results. Even though it may be handled by the same person.
Theappraisal report determines how much it would cost to rebuild the property. It is therefore based primarily on the cost of materials and labour, but no longer takes into account other parameters, such as the popularity of the location or the interest in properties of a similar type. Generally, a time interval of six months is quoted as the period of validity of the opinion on the value of the property.
The market price then tries to arrive at a value at which the property could be sold. Apart from the materials and condition of the dwelling, it also takes into account, for example, the location in which the dwelling or house is situated. The valuer’s conclusions for the normal price are valid for as long as market conditions change.
The price of an expert’s opinion is in the order of a few thousand, about 5-10 thousand crowns.