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Standardised comparative value method; limited judicial reviewability of the comparative prices reported by the expert committees. The Lower Saxony Finance Court had to deal with a highly interesting question in its ruling of 1 December 2022 – 1 K 90/19.
The case concerned the determination of the property value of an inherited property (condominium) for the purposes of inheritance tax pursuant to Section 12(3) of the Inheritance Tax Act (ErbStG).
The property value is to be determined on the basis of comparative prices communicated to the tax office by the expert committee for property values. However, it is questionable whether these comparative prices are correct at all and how this can be verified.
Hergen Kassuba, a tax advisor specialising in real estate inheritance, is not convinced by the ruling of the Lower Saxony Finance Court:
“It is unacceptable that the comparative prices quoted by the expert committees are only comprehensible and verifiable to a very limited extent. The comparative real estate prices are thus similar to a black box. The entire valuation process is non-transparent. In my opinion, the properties used for comparison must be precisely identified in the expert opinion, which has not been the case to date. I therefore hope that the Federal Fiscal Court will grant further review options in the appeal proceedings.”
The judicial review of notifications from the expert committees for property values is limited to obvious inaccuracies.
The tax offices are responsible for determining the value of the property based on the comparative prices communicated by the expert committees. In this context, it is not objectionable if the tax offices calculate an average value from all the comparative prices communicated and apply this value.
The failure to provide the exact addresses of the comparative cases communicated by the expert committee cannot constitute an obvious inaccuracy.
The comparative prices stated in the communication from the expert committee do not constitute a price range.
Rather, differences in the influencing factors of the property being valued have been taken into account in the conversion using the model described in the notification in such a way that the individual comparative prices are then directly comparable. In such a case, the valuation using the lowest comparative price provided would not correspond to the valuation prescribed by section 183(1) sentence 2 of the BewG.