Valuation Corp.
appraisal service & consulting
Valuation Corp.
appraisal & consulting

VALUATION Corp. - professional appraisers provide property appraisal services in Moscow and other Russian regions

Property appraisal in buy-sell transactions

Property appraisal in a process of closing a buy-sell transaction is probably the most common purpose of property appraisals in Russia. Although parties of the deal (buyer and seller) can determine the price themselves (unless otherwise is required by law), they often prefer to have the subject property independently appraised in order to obtain a realistic price benchmark as of the date of transaction.

Appraisal report prepared by an independent appraiser will prove to the all the parties concerned (shareholders, parent organization, government authorities, etc.) that the transaction was conducted in good faith, that each party acted in its own interests and was informed about the actual market situation, fair market value of the subject property and the value of similar properties.

To have an independent appraiser’s opinion about the market value of the subject property is also important in case of tax payments adequacy review by Russian tax authorities, because the Russian Tax Code Art. 40 allows tax authorities to control sales prices for the purposes of tax base calculation: “In the circumstances envisaged by paragraph 2 of this Article, when the price of goods, works, or services applied by the parties to a transaction is more than 20% above or below the market price of identical (similar) goods (works or services), a tax authority may pass a motivated decision to charge additional tax and penalties calculated as if the results of this transaction were estimated on the basis of market prices for respective goods, works or services”.

In a dispute with a tax office alleging underestimated income or underinvoiced sale of products, an appraisal report for the subject property (goods) will enable you to produce persuasive arguments supporting your position in order for the transaction price to be recognized as consistent with the market value. Another advantage of an independent property appraisal is that the appraising report issued to the customer has the status of an official document of evidential significance and may be used in the court in tax cases.

When concluding a property appraisal agreement, depending of your purpose, you may instruct the appraiser to determine one or several types of value for the subject property:

  • market value – the most probable price of the property if sold in the open competitive market;
  • replacement value – the total cost of making a property identical to the subject property at market prices;
  • investment value - the value assuming the earning capacity of the property and specific investment objectives of a particular investor;
  • other specific types of value.

We have extensive experience in property appraising in Russia and should you require any assistance with this matter, please contact us.