Domestic property: the steps in the valuation hierarchy – based on the draft

Four value sources with prescribed relationships

Section 15(1) would identify four sources for domestic property’s calculated value: a recent transaction, an indexed earlier transaction, the tax authority’s mass-valuation model and market value under Section 19. These would not be interchangeable options available for unrestricted selection. Section 17 would place them in sequence and prescribe the conditions for departing from that sequence.

Transaction value would not always equal the contractual price. Section 15(2) would start with consideration between independent parties, while recognising a different market value finally determined for transfer-duty assessment. For gratuitous acquisitions without such a duty value, inheritance proceedings, a tax-and-value certificate or another official instrument could supply the value; a differing court-determined market value would also have a specific role.

Recent transactions would take priority subject to changes in condition

Section 17(1) would require an available transaction value from the twelve months preceding the reference year’s final day. This would depend on there having been no material value-affecting change in the property’s legal, technical or use condition between transaction and reference date. Priority for recent evidence would therefore depend on what had actually happened to the property.

The provision would highlight substantial renovation, defined in Section 2, point 19, by costs reaching twenty per cent of transaction value. Following a material change, Section 17(1) would not simply send the calculation to indexation or model value: it would refer to Section 19(3)–(4). Changed condition would consequently open a specific valuation route rather than the ordinary next step.

Older transactions would depend on eligibility for indexation

If the recent-transaction rule could not apply, Section 17(2) would require an available qualifying indexed transaction value. Section 15(3) would require a transaction more than twelve months but no more than ten years old, without material legal, technical or use changes. Merely possessing an old price would therefore not establish eligibility for indexation.

Section 15(4)–(5) would distinguish methods by property type. Housing and farmland would follow Annex 2’s detailed indicators; other property would use the applicable KSH property-price index change. Section 17(6) would require the calculator on the tax authority’s website. The second stage would therefore involve a prescribed adjustment using specified evidence, not an arbitrary increase in historical value.

Mass valuation would follow only when earlier routes failed

Under Section 17(3), model value would apply where the first two methods could not establish a value and the authority had already determined one for the property. Operating a model would not itself mean every property necessarily had an available result. Section 2, point 30, would connect the model to statistical valuation of housing and agricultural property without buildings.

Section 18 would base the model on transaction and valuation data from duty assessments, land-register information, and spatial, technical, location and environmental characteristics. It would reflect condition and value relationships on the reference year’s final day. The authority would publish coverage, operating principles, sources and methodological information, giving the model a defined role beyond a merely named technical possibility.

Expert departures would have different levels of freedom

Section 17(4) would permit Section 19 market value instead of indexed or model value. Departure from a recent transaction would be exceptional. The valuation would have to credibly establish that particular transaction circumstances, or individual factors affecting consideration independently of market value, meant the transaction figure did not reflect market value at the reference date.

If none of the hierarchy’s first three sources established a value, the same subsection would require Section 19 valuation. The expert route could thus be an optional replacement, a narrowly substantiated exception or a mandatory fallback. Conflating these situations would obscure why, and under which conditions, market value could become the calculated value.

A twenty-per-cent difference would require explanation, not automatic exclusion

Section 17(5) would require greater detail where expert value differed by more than twenty per cent from recent transaction, indexed or model value. The report would need to explain the difference, particular transaction or property circumstances, and supporting value-forming factors. A different final figure alone would not provide sufficient substantiation in that situation.

The provision would nevertheless expressly state that a difference exceeding twenty per cent would not itself disqualify expert value. Nor would this be a general tolerance for valuation error: Section 17(4)’s underlying conditions would remain. In particular, overriding a recent transaction would first require exceptional circumstances, which the additional explanation for a large difference would elaborate.

The valuer and methodology would remain conditions

Section 19(1)–(4) would require an independent, appropriately qualified valuer. Domestic farmland would require a judicial expert authorised in farmland valuation. Expert valuation of high-value domestic non-farmland property would require a judicial property-valuation expert; another registered valuer’s estimate reaching HUF 500 million would also trigger that requirement. This would be a valuation threshold, not the HUF 1 billion net-wealth tax-base threshold.

Section 19(4)–(9) would govern dates and methodology. An appraisal dated within twelve months could be reused only without material property or market changes; older appraisals would face separate indexation conditions. High-value property would require at least two of the market-comparison, income and cost methods, with reasons for the results’ weighting and omission of the unused method.

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