How to Correctly Calculate VAT: 5% of the Actual or Cadastre Value of the Apartment?

There is a significant difference between the cadastre (official valuation) and market value of an apartment. The legally required VAT is based on the amount stated in the purchase agreement. For instance, when purchasing a property for $100,000, you will need to pay 5% VAT on this amount. However, for large transactions, this scheme might not be practical. The solution could be having the realtor call an appraiser to establish the cadastre value, which is typically lower than the market value. Thus, the VAT would be calculated based on the cadastre value. Another option is to split the property cost into two contracts, with VAT being charged only on the main contract.

However, this approach has its limitations. If you already have a registered purchase agreement, this method may not be applicable, and VAT will be calculated based on the value in this agreement.

According to our lawyer, it is best to register the purchase agreement to avoid risks, especially if there is no ownership certificate for the property. Regarding an additional agreement, it is possible, but in legal disputes, only officially registered agreements will be considered.

For successful and safe property transactions, it is important to involve professional realtors and lawyers.

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