Albania Property Revaluation, How Will it Affect Your Taxes?

Albania Property Revaluation, How Will it Affect Your Taxes?

TIRANA, February 4

All the citizens, physical and legal persons, who own a real-property in Albania are granted the right to evaluate it until September by paying a reduced rate instead of the 15 percent on the real-property capital gain. The law no. 90/2019 ‘On revaluation of real property’ was published on the Official Gazette, issue 182 on December 30th and came into effect on January 14th.
Hence, physical and legal persons can reevaluate their property at market value until September 30th.

What is a revaluation?
The revaluation is a process undertaken to appraise all real-properties also known as immovable properties according to their full and fair value.

What is the fair market value and why it’s important?
The new law wants you to make an assessment of your property at fair market value. Market value is the worth that a property would sell for in a competitive and open market. Fair value is important to property owners who must pay taxes on that property.

When was the last revaluation?
This is the third time that the government launches a property assessment. The first evaluation was conducted in 2011-2012. The second revaluation was held in 2013. Hence the current values are based on the latest revaluation. The trend shows that assessments are at a full and true value at least as often as every fourth-fifth year.

What do you need if you’re an individual?

First, you need to know that the payable tax for individuals for registering this revaluation is three percent (3%) of the difference between the new appraised value and the value of the previously registered act or the revalued value, for which the tax has been paid earlier.

For example, if you paid €50,000 for a property that you’re selling for €70,000, with the revaluation, you will pay three percent instead of 15 percent on the capital gain.
Property capital gain €70,000 – €50,000 = €20,000
15% of €20,000 is €3,000
3% of €20,000 is €600

The revalued amount will thus serve as a basis for calculating the realized gain in the case of a transfer of ownership of the real property in the future. The capital gain tax will be taxable at the moment of transfer with the defined rate (currently 15 percent).
If someone revaluated the property at the value of €70,000 and is selling it for €65,000, the revaluation assessment is used as the highest value for the calculation of the capital gain.
(Revaluation price – minimal fiscal price) x 15%
If the minimal fiscal price in force and reevaluation price are the same, the owner pays no tax.
(70,000 – 70,000) x 15% = 0
If the minimal fiscal price is higher than the revaluation price, for example, €75,000, this will be the highest value for the calculation of the capital gain tax
(Minimal fiscal price – revaluation price) x 15%
(75,000 – 70,000) x 15% = 750

The tax will be higher if the property assessment was done many years ago or if there’s no revaluation price at all.

The law clearly defines that the value market can’t be less than minimal fiscal prices. If it’s less, the revaluation will be conducted by the State Agency of Cadaster at the minimal fiscal prices.
Individuals can revaluate a real-property with the service of a real-estate expert licensed by the responsible authorities or by the local offices of the State Agency of Cadaster.
The minimal fiscal price is also used for registered properties that lack a purchase agreement. See below for the official verdict of minimal prices in force for each district.

Property revaluation for legal persons

Like the physical individual, legal persons are granted the right to make a revaluation of their property at market value if it’s lower than the minimal fiscal price current into effect. The property assessment is conducted by independent experts who are licensed to provide this service. Legal entities will have to pay 5 percent of the difference between the revalued amount and the carrying amount registered for real estate.

Property tax, minimal fiscal price

Read also: Real estate in Albania

No Tax Implications on Real Estate Transfer to Family Members

Source: parlament.al, qzb.gov.al


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