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The property valuation method is considered a good valuation method for real estate in rural areas or for special buildings. However, it rarely comes to current market prices for real estate, since the information required for this purpose is not used in this process. When it can still be useful, shows the following article. It also provides an outlook on the complexity and accuracy of the process. In principle, the procedure to be chosen is prescribed by law. Sometimes in practice it is also possible to choose between the different evaluation methods.

At the beginning, it is important to clarify which properties can be valued using the property value procedure. It is particularly relevant for this valuation method that only real estate that is not yield real estate can be valued. Thus, mainly buildings can be valued which are sold privately and do not depend on the return on investment. In addition, self-utilization is in the foreground for these properties.

It should be emphasized that rarely to hardly any comparative values or similar rentals are available. This is usually due to the location of the properties, which are often located in rural areas or rather unusual, such as villas or castles. Since no income can be determined for this purpose, it is also not possible to use the income value method. However, in the real estate valuation process, as well as in the income valuation process, the market adjustment to the local real estate market is significant. This is particularly relevant to the value finding of the tax offices, since the market rarely has data available to them.

In the further course, it is important to get to know the important key figures in the asset value method. Because the substance value and the soil value are to be used for this.

It is also important to note that property values must always be considered in the special context of the respective tax. First, there is property tax, which burdens holding or owning property. In addition, there are income taxes such as income tax. These are taxes that mainly include income from real estate in the determination. Finally, there is the property transfer tax, the inheritance tax and the gift tax, which cover the transfer of property.

First of all, it is necessary to take a closer look at the property value procedure on the basis of the Valuation Act. According to § 189 (1) BewG, the property value procedure is applied by determining the value of the buildings as property value separately from the land value according to § 190 BewG. It is also necessary to take into account the fact that other construction installations, in particular outdoor installations, and the value of the other installations are regularly compensated for the value of the buildings and the value of the land and thus do not lead to price increases.

In paragraphs 2 and 3 of § 189 BewG, the land value is described as the value of the undeveloped land according to § 179 BewG. In addition, the sum of the land value and the property value of the building gives the preliminary property value of the land. However, it is necessary to multiply this to the common value by a value number according to § 191 BewG and thus finally make an adjustment.

According to §§ 21-23 ImmoWertV, the material value procedure is essentially based on the assessment of the material value. The preliminary property value, which represents the material value of the built-up property, is determined as the sum of the land value and the building value and the external installations. Only an additional market adjustment by means of a property value factor ultimately leads to market value. Here, the ImmoWertV is required for expert committees to determine the property values. But in principle, these regulations apply to all experts.

Since the methods of the Valuation Act are based on the predecessor of the currently valid ImmoWertV, however, there are differences that allow a certain scope for design. You can choose the valuation method more flexibly to determine the value of the property and also force certain reductions or increases in the value through object-specific characteristics.

In addition, a particularly delicate point in the Valuation Act is the regulation that a property must always be valued at at least 30% of the total useful life. This leads to enormous overvaluations, which are circumvented in the ImmoWertV.

As already mentioned in the comparative value procedure, the value of unbuilt land is determined according to the area and the land values according to § 196 BauGB. For this purpose, the soil guidelines must be determined by special expert committees and passed on to the tax offices.

For the valuation, the soil guideline, which was to be determined last, must always be used. However, if no soil indicative value can be determined by the expert committees, values of comparable areas must be used for the valuation.

In order to determine the building property value, the normal, so-called standard production costs of the building are to be assumed according to § 190 (1) BewG. These depend on the production costs per unit area. In order to always obtain the currently appropriate control manufacturing costs, these must first be adjusted to the valuation date. More information follows in paragraph 2 of § 190 BewG. Subsequently, this rule manufacturing cost is multiplied by the gross floor area of the building to obtain the building rule manufacturing value. The control production costs can be found in the appendix 24 of the evaluation law.

According to § 190 paragraph 2 BewG, the Federal Statistical Office adjusts the standard production costs by the quarterly published construction price indices. It should be noted that price indices for the construction industry should be used. The Federal Statistical Office for Residential and Non-Residential Buildings records an annual average, which is applied here. Lastly, it is important to know that the BMF announces the construction price indices in the Federal Tax Gazette.

According to § 190 paragraph 4 BewG, the building rule manufacturing value is reduced by an age value reduction. The age of the building is considered relative to the total economic life, which can be found in Appendix 22. Where measures have been taken to extend the overall economic life, a later year of construction shall be included in the calculations. On the other hand, a value of at least 30 % of the building production value is used if there is a demolition obligation for the building.

According to § 191 (1) BewG, property value factors, also known as value figures, are used to determine the market value of the property. The expert committees shall make use of the values obtained during the last evaluation period prior to the calendar year of the valuation date.

Otherwise, the values given in Appendix 25 BewG are used. But through the so-called market adjustment factor, the value of the property is adjusted to the real estate market.

An immense disadvantage in the asset value process is the required expertise, which requires an experienced expert. Especially since this method is also one, if not the most complicated. This is because the often complicated determination of the building substance is necessary. In addition, it is not oriented towards the current market situation which can lead to a clear difference in the final value of the property. In addition, there may be little to no data for the property value procedure in modern houses. But by determining the manufacturing cost based on the current price level, the current substance value can be determined relatively effectively.

On the other hand, this can also be an advantage in certain situations. Because in rural regions as well as special and rare real estate, the property value procedure is often the only option for assessing the property. In addition, the assessment of the building substance helps to put into value the measures already taken on the property.

The different valuation methods in real estate tax law are useful for different situations. For private purposes, a combination of comparative value method and physical value method is more often useful. Because rarely there is rental income, with which one can determine an income value. In addition, the property valuation process is often further away from the current market situation than some property owners would like. In addition, when lending from a bank, often only the property value can be deposited as collateral, which is often lower than the property is worth on the market. This must be particularly noted. If you are more interested in the individual procedures, we will be happy to advise you on this. In addition, we have already designed some articles and highlighted the individual methods in more detail.