Land tax and rent may increase: The Cabinet of Ministers changed the minimum land value

The normative monetary valuation, which is the key basis for calculating land tax, rent for state and communal lands, as well as state duty during real estate transactions, has undergone further changes. The current Methodology, approved by the Cabinet of Ministers Resolution No. 1147, has received another update.

The innovations fixed by Cabinet of Ministers Resolution No. 676 are intended to ensure a more accurate determination of the value of land plots, taking into account the actual location and the real demographic load on settlements.

Previously, the valuation was often based on generalized community indicators. Now, the calculation of capitalized rental income and zonal factor coefficients is directly tied to the population size of a specific settlement. In points 3 and 8 of the Methodology, the phrase "territory of the territorial community" has been changed to "settlement."

This will help avoid artificial overestimation or underestimation of land value in villages that are part of communities with large administrative centers. If technical documentation is prepared for part of the community's territory, for example, a specific settlement, the norm is taken based on the population of that settlement.

The government updated the range of capitalized rental income norms. The new version of Appendix 1 to the Methodology sets updated indicators of the cost per square meter of land depending on the population size of the settlement.

From now on, the minimum norm for the smallest settlements with a population of up to 200 people is 58 UAH per square meter, while for the largest cities in the country with a population of over 1.5 million people, this figure rises to 1302 UAH.

At the same time, the government raised the demographic threshold in the Methodology from 1 million to 1.5 million residents, allowing for more precise consideration of the characteristics of large urban agglomerations and avoiding sharp jumps in land value determination.

Adjustments were also made to the procedure for assessing agricultural lands. Owners and managers of land plots have gained the opportunity to initiate additional soil surveys to clarify agro-production soil groups.

At the same time, the legislator established safeguards: such surveys cannot be conducted on lands where the nationwide NGO cartogram has already identified especially valuable soil groups. The results of the surveys will have legal force only after their inclusion in the technical documentation of normative monetary valuation.

Appendix 4, which defines the resort-recreational value coefficient, also underwent targeted changes.

Odessa has been officially included in the list of settlements for which special valuation approaches are applied. This may affect the normative monetary valuation of land in the city and take into account its role as one of the main resort centers of the country. At the same time, the settlement of Lysovychi was excluded from the list, which will also change the application of the relevant coefficients for this territory.

The adoption of Resolution No. 676 was a response to requests from local self-government bodies for a fairer and more justified land valuation. The main goal of the changes is to eliminate the "averaging" of land plot values within large territorial communities and to consider the real characteristics of each settlement.

The updated capitalized rental income norms and the inclusion of Odessa in the list of resort-recreational territories may positively impact local budgets' revenues. At the same time, to implement the updated approaches, many communities will have to develop or adjust technical documentation for normative monetary land valuation, which will require additional financial and organizational resources. Moreover, the increase in normative land value in certain settlements may cause a rise in tax burdens and rental payments.

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