By Mariam Badalyan
ArmeniaNow Reporter
Sargis Zeytunyan, a resident of Mashtots Avenue of Yerevan, was surprised to find out that he is to pay three times more property tax for his apartment this year than last.
“I paid 5,602 drams last year, now I have to pay 19,811. They say they have introduced some changes, but there must be something wrong with the new system. Many people may find this sum pressing on their budget.” says Sargis. Many other residents in the Center of Yerevan also share his concern.
While old buildings exist among new, prices go up for all
Arshak Khachatryan, head of Department for Assessment and Synchronized Observations of Real Estate of the State Cadastre Committee explained that taxes rise with value – a common trend in other countries, but still confusing for some Armenians “in transition”.
“If people decide to sell their apartment or house they will get more money on their property today than they would three years ago. It is natural that this change is reflected in the cadastre value and the property tax. It is widely-used practice in the world that real estate taxes be commensurate with market prices. There is nothing to be surprised at,” Khachatryan says.
According to him real estate costs have doubled in the republic and especially in Yerevan within the last 3-4 years.
The department conducts monitoring and assessment of real estate market in the whole republic every three years as stated by the new law on property tax enforced since 2002. Khachatryan explained that last summer they have conducted a regular real estate assessment.
The cadastre value of a property makes 60-65 per cent of its market price. Different price-making factors – like location (according to zoning belts), floor, height of ceiling, degree of damage caused, depreciation, function of the building (residence or production construction), material it is made of (stone, steal-concrete), etc., are taken into consideration while assessing its cadastre value.
“Previously there was no differentiation of the building function. In the new law, types of buildings are defined according to their functions. If the building is meant for production purposes, its cadastre value will be higher,” Khachatryan says.
Interior cosmetic changes, however, which may add much to the market price of the apartment, are not considered while calculating the cadastre value.
Khachatryan advises citizens to have a look at the cadastre value of the property in order to be able to make a right assessment of market value of the property. Owners or potential buyers may calculate the cadastre value of apartment by using the formulae which they may find in the appendix to the new law on property. They may also dispute the assessment by the Cadastre committee and demand its reconsideration if they think there has been a miscalculation.
Another change marked in the 2002 law (and reflected in the most recent assessment) is that tax rate for property exceeding 40 million drams ($89,887) was raised to 1.0 from 0.8.
“This is natural. Elsewhere in the world costly property is taxed more,” Khachatryan says.
Nevertheless, private property costing below 3 million drams ($6,593) remains untaxed.
“This means that 62 percent of property in Armenia, mostly those in marzes, is not taxed,” Khachatryan says.
The department submitted assessment results to the tax authorities and local self-governing agencies last autumn. The new rates are valid starting from January 2005.
According to Khachatryan there has been 27.2 per cent increase of sell-purchase contracts of real estate in 2004 as compared with 2003. This tendency may still continue in the next 1-2 years. However, Khachatryan thinks it will not exceed 15-20 per cent.
“Despite possible growth of prices, there will be no changes in the tax assessment until the end of 2007,” Khachatryan said. “If new assessment in summer of 2007 shows that there are more changes in the real estate market, they will be reflected in 2008 tax leverage”.
“The growth of prices in the real estate market is gradually moderating,” president of “Bars” Real Estate Agency Marina Chatinyan said.
“Bars” (a leading agency in central Yerevan) observations show that the growth in prices is mostly conditioned on economic growth in the country. “People in Armenia have money to buy an apartment or land today. There is demand and the prices go up,” Chatinyan says.
Economic stability is one of the main reasons why foreigners choose to buy apartments in Armenia. Armenians living abroad and foreigners of other nationality (mostly Iranians and Syrians) also buy real estate in the country. Foreign buyers come mostly from Russia (Armenians having Russian citizenship or living in Russia) – 10-15% of the total number. Buyers from the USA, European countries, Iran and Syria are of less percentage.
Diaspora Armenians buy apartments mostly to spend their holidays in the homeland.
Growth of property deals within the last 3-4 years has been marked republic-wide. Kharchatryan says deals in marzes have grown 16.6% in 2004 as compared with 2003. In Yerevan it grew by 38%.
While for many families buying an apartment in Yerevan remains a remote dream, some people sell theirs to make a living. Those living in the center will benefit a lot more than those living in the suburbs. Prices for one square meter in the suburbs range from $80 to $200 USD (the average rate is $103).
In the center, however, the numbers grow multiple times. The market price for 1 square meter of building space in the center ranges from $350 to $1000 (the average rate is $530 USD). Prices continue to go up even though the whole center is full of construction sites and there is plenty to choose from.
The number of real estate dealers has also grown. Currently, there are 105 real estate and 67 assessor agencies and entrepreneurs registered at State Cadastre. In 2000 there were 14 real estate and 22 evaluator agencies and private entrepreneurs. Last year those numbers rose to 68 and 57 correspondingly.
Yorumlar kapatıldı.