05 Methods for Appraising Real Estate That Is Land

23:34, 10/07/2024

On October 06, 2016, the Ministry of Finance issued Circular 145/2016/TT-BTC on promulgating Vietnam Valuation Standards No. 11.

According to the regulations in Circular 145/2016/TT-BTC, the appraisal of real estate land can apply the following methods:

- Comparison method;- Deduction method;- Direct capitalization method;- Discounted cash flow method;- Surplus method.

Also according to Circular 145, depending on different cases, an appropriate appraisal method will be applied, specifically:

- The comparison method is often applied to determine the value of land use rights of a parcel in cases where there is market transaction information of parcels similar to the appraised parcel.- The deduction method is often applied to determine the value of land use rights of an empty parcel in cases where there is insufficient market transaction information of similar empty parcels, and only information on transactions of parcels with assets attached to the land similar to the appraised parcel is available.- The direct capitalization method and the discounted cash flow method are often applied to determine the value of land use rights of parcels that generate income for the user.- The surplus method is often applied to real estate with development potential, specifically empty land for construction or land with structures on it that can be renovated or demolished to build new structures for the best and most efficient use.

More details can be found in Circular 145/2016/TT-BTC effective from January 1, 2017.

- Thanh Lam -

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