The sustainable limit of the real estate tax: An urban-scale estimation model

Abstract

The equalization criterion is important in relation to the real estate tax. The amount that the taxpayer must pay to the government should be commensurate with the current market value of the asset. In several European Countries, including Italy, the real estate tax is based on cadastral incomes, which often do not express the assets real market value. The evaluation model proposed in this study, developed following the evaluation logic of typical values procedure, aims to get to tax equalization by revising tax rates according to market information properly collected from datasets provided by private or public agencies. The model is set-up following these stages: analysis of the price formation mechanisms for urban properties and choice of evaluation process; selection of real estate features needed to achieve the tax equalization aims; data collection; definition of value function; calculus of the Municipal Property Tax; model calibration. The validity of the model is demonstrated by a case study application carried out on a wide urban area in which are situated about 500 real estate units. © 2014 Springer International Publishing.