What are the risks when buying a property with an undervalued cadastral value?
Until recently, underestimating the declared value of a transaction (specifying the cadastral value instead of the market value) was a common practice to reduce fees. However, this carried risks: if you sold real estate for 5 years, you would have to pay capital gains tax on the difference between the cadastral and the sale price. In addition, in case of disputes or problems, the official Tapu value might not reflect the actual amount of your investment. With the new changes, when the cadastral value approaches the market value, the risks of underestimation decrease, but the direct costs of taxes and duties increase.