The cadastral value of real estate is an essential indicator serving as the basis for taxation. Updating this value in alignment with contemporary market changes is crucial for achieving the principle of accuracy in taxation. Indexation of cadastral value refers to the method of automatically adjusting values over time according to inflation or market trends, thereby ensuring continuous cadastral valuation outcomes. The following discussion examines the economic and legal foundations of cadastral value indexation, mechanisms employed in international practice, its influence on tax fairness and valuation accuracy, as well as possibilities for its integration into existing valuation methodologies. The analysis draws from scientific sources and international normative practices, providing conclusions appropriate for use as a scientific basis in further research.

Economic foundations of indexation primarily aim at maintaining a fair and stable tax base. Over time, due to inflation or growth in the real estate market, cadastral values that remain without reassessment lag behind their actual values. This leads to decreased real tax revenues and unfair distribution of the tax burden. Indexation serves as a solution by regularly updating values to neutralize the effects of inflation and ensure stable real tax revenues. For instance, legislation in many countries allows indexing tax rates or valuation values according to inflation or market indices. This approach automatically adjusts the tax base according to economic conditions, thereby maintaining stability in budget revenues.

Legal foundations of indexation are closely related to principles of fairness and accuracy in taxation. In many countries, laws mandate periodic review of cadastral values or their updating through official coefficients. To achieve the principles of “accuracy” (clearly defined tax liabilities for each taxpayer) and «fairness» in taxation, cadastral values should be brought as close as possible to market values. Indexation addresses this objective by providing an automatic mechanism to update valuation figures according to legally established norms. For example, Polish legislation sets the agricultural land tax base equivalent to the price of 500 kg of rye, which annually indexes the tax base according to grain prices. Similarly, countries such as Georgia and Moldova permit indexation of tax rates or values through inflation coefficients. Thus, the method of indexation is justified by economic necessity (adaptation to inflation and market fluctuations) and legal requirements (tax fairness and accuracy).

In the field of real estate assessment and taxation, studies by both domestic and international scholars on cadastral value indexation, econometric models, and Automated Valuation Models (AVMs) contribute to accurately forecasting market values, fairly distributing the tax burden, and ensuring regional economic stability.

Baumane (2010) systematically classifies mass appraisal models for real estate, highlighting the advantages and disadvantages of fairness criteria, differential coefficients, and normative value concepts used in Europe. This work emphasizes the necessity of updating cadastral values based on market data in forming the tax base[7].

Guerrieri, Festa & Ghiraldo (2014), drawing from the Italian experience, analyze how outdated practical values (rendite catastali) result in unequal distribution of tax burdens, and they propose a rapid, low-cost correction method using “location coefficients.” This study scientifically substantiates the effectiveness of simplified models to ensure the principle of fairness [2].

Kozhukhіvska and colleagues (2017), using Ukraine as an example, argue for reducing the frequency of cadastral reevaluations and propose creating an economic model that can swiftly adapt to market conditions. The article calculates the potential to increase local budget revenues through innovative elements such as cluster indices, changes in location, and integration with GIS databases [3].

Sternik, Gareev & Akhmetgaliev (2021) propose using big-data aggregators and real-estate API databases for determining cadastral values in Russia. They identify the limited use of digital data in valuation reports and develop a concept for creating a unified data platform [8].

Chernynh, Zotova & Bogdanova (2019) examine the centralization of organization, staff qualifications, and data sources resulting from the transfer of state cadastral valuation in the Russian Federation to budgetary institutions. They reveal both the strengths and weaknesses of the current regulatory framework [6].

Tulakov Ulugbek (2025) offers practical proposals for the stages of the cadastral valuation process in Uzbekistan, the rights and responsibilities of participating entities, and integration with digital systems (CAMA, API). He proposes a national model aimed at improving local market transparency and strengthening tax administration [9].

The study employs a combination of theoretical and empirical methods to examine the impact of real estate taxation on market prices. Conceptual foundations were established through analysis of regulatory-legal documents and scholarly literature. Data from state statistical agencies were used to systematize indicators, and statistical correlations were evaluated using correlation and regression methods.

The principle of accuracy in taxation involves correctly determining the tax base and applying appropriate tax rates to ensure a fair and equitable tax system. In the context of cadastral valuation, accuracy means that the assessed value of real estate for taxation purposes should correspond as closely as possible to its actual economic value. This includes minimizing errors and ensuring that valuations reflect the real market value of real estate properties. Accurate cadastral valuation has multifaceted implications for various stakeholders. For property owners, it ensures fair tax obligations based on the true value of their property, reducing the risk of overpayment or underpayment of taxes. For tax authorities, accurate valuations help increase tax collection by minimizing tax evasion that may arise due to outdated valuations. Overall, reliable information about the value of real estate supports better allocation of resources and enhances the efficiency of the market[9].

In Uzbekistan, efforts are underway to modernize the cadastral valuation system through the implementation of automated systems and mass appraisal methods. The main goal is to determine cadastral values that are closely aligned with market prices. Training specialists in valuation and developing the regulatory-legal framework are also progressing. Despite these efforts, it is evident that the current system lacks a mechanism for regularly adjusting cadastral values based on market changes. This highlights the necessity of introducing an indexation mechanism. Inaccurate cadastral values can lead to unfairness in the tax system, whereby owners of similar properties may pay significantly different tax amounts due to outdated valuations. If property values change at different rates across regions or property types, a static valuation system becomes increasingly inaccurate over time, resulting in horizontal inequity–where equal properties are treated unequally [16].

Indexation in real estate valuation is a method of periodically and systematically adjusting property values using relevant indices to reflect changes in market conditions–primarily inflation. It serves as an alternative to frequent full reassessments by helping to maintain the real value of the tax base over time. Introducing cadastral value indexation offers several key advantages. It supports valuation accuracy by ensuring that cadastral values remain closer to current market prices during the periods between comprehensive reassessments. Indexation also helps reduce the tax burden on payers by preventing sudden and sharp increases in tax liabilities that might otherwise result from infrequent full reassessments. Furthermore, it enables continuous improvement by establishing a mechanism for regular value updates, thereby enhancing the overall quality of the cadastral system. Additionally, indexation ensures a stable and predictable stream of tax revenues for the government [5].

From the standpoint of valuation accuracy, indexation serves as an essential adjustment mechanism. When the interval between full reassessments is long, valuation accuracy tends to decline over time–cadastral values begin to deviate significantly from actual market values. Indexation helps maintain this accuracy by regularly updating values. For example, in France and Germany, even when values were not reassessed for extended periods, indexation helped update them to some extent, reducing overall valuation errors and mitigating sharp fluctuations during subsequent comprehensive reassessments. Another positive effect of indexation is its ability to soften tax burden shocks. Rather than experiencing a sudden and steep increase in property value after years without reassessment, gradual annual indexation offers a smoother transition for property owners. This leads to easier adaptation for taxpayers and increases trust in the tax system. For this reason, many experts consider indexation to be a monitoring mechanism that prevents the shock of delayed reassessments.

Certainly, indexation cannot replace full reassessment–it is a rough method that may not account for all individual changes occurring in the market. For instance, property values in city centers may rise more quickly than those in peripheral areas. If a uniform 10% index is applied across the entire market, centrally located homes may remain undervalued, while peripheral properties could become slightly overvalued.

Therefore, periodic comprehensive reassessments are necessary alongside indexation. Nonetheless, the indexation approach contributes to another crucial aspect of fairness–stability and continuity. With indexation, tax burdens do not change abruptly from year to year but evolve gradually. This improves taxpayer certainty and allows for a more predictable and steady increase in tax revenues without sudden fluctuations.

The application of indexation in real estate taxation is practiced in various countries. In Belgium and France, the concept of “cadastral income” is used–referred to as Revenu Cadastral in Belgium and Valeur Locative Cadastrale in France–which is indexed annually and serves as the basis for calculating both property tax and rental income tax. In Italy and Spain, the concept of “cadastral value” (Valore Catastale in Italy and Valor Catastral in Spain) is applied to various real estate-related taxes. These values can be periodically updated using government-approved coefficients. Denmark applies indexation of purchase prices for taxation on foreign real estate. This involves the use of approved foreign price indices, OECD housing price indices, or Denmark's own index for summer house prices. In India, indexation is used to adjust the purchase price of real estate for calculating capital gains tax, thereby reducing the taxable profit [8].

Belgium uses the “Revenu Cadastral” (cadastral income) system, which is an estimate of the average net annual rental income of a property based on data from 1975. This income is indexed annually using a coefficient set by the government and serves as the basis for calculating both property tax and rental income tax. Regular reassessments of cadastral income are not conducted; however, mechanisms exist for removing or updating valuations in cases of new construction or significant renovations [5].

In Italy and Spain, the “cadastral value”–Valore Catastale in Italy and Valor Catastral in Spain–is used for various real estate taxation purposes, including property tax, inheritance and gift tax, and certain municipal charges. The cadastral value is determined based on several factors, such as location, property characteristics, construction cost, and age. These countries also allow for periodic updates of cadastral values using coefficients approved by the government to reflect changes over time [7].

Denmark takes a different approach to taxing foreign real estate, basing it on indexation of the purchase price. To determine the tax base, various indices are used, including OECD housing price indices and Denmark’s own index for summer house prices. The choice of index depends on the country in which the property is located. Danish tax authorities approve the use of specific indices for different countries, which allows them to account for variations in the dynamics of real estate markets across jurisdictions [3].

Analysis of international experience shows that indexation of cadastral value is a widely used tool for maintaining the relevance of real estate valuations for taxation purposes. In the reviewed countries, the success of indexation largely depends on the transparency of the methodology, the regularity of updates, clear communication with property owners, and the existence of mechanisms for resolving disputes.

However, there are also potential challenges, such as the inability of indices to fully reflect local market conditions and the need to address significant discrepancies. These limitations highlight the importance of conducting periodic full reassessments in addition to indexation.

Integrating cadastral value indexation into Uzbekistan’s cadastral system would bring substantial benefits, including:

This reform aligns with the core principle of accuracy in taxation and supports the development of a more transparent and efficient financial management system in Uzbekistan.

Ultimately, cadastral value indexation can:

To successfully implement the proposed cadastral value indexation method in Uzbekistan, the following recommendations are made:

Thoroughly analyze the availability and quality of real estate price data in Uzbekistan to identify the most appropriate index.

Develop a legal framework that regulates the indexation process, including the methodology, frequency, and responsibilities of relevant institutions.

Establish or adopt a reliable real estate price index that is representative of the Uzbek market–starting with a national inflation-based index and gradually transitioning to more precise regional indices by property type.

Integrate the indexation methodology into the existing automated cadastral systems to ensure efficient and accurate value updates.

Conduct a broad public information campaign to educate property owners about the concept, benefits, and process of cadastral value indexation.

Establish a clear and easy-to-understand multi-stage dispute resolution mechanism to allow property owners to challenge their indexed valuations.

Pilot the proposed methodology in selected regions before full-scale national implementation to identify potential issues and shortcomings.

Provide targeted training for Cadastral Agency staff on the new indexation procedures and the system's functional capabilities.

Create a mechanism for regular review and refinement of the selected index and indexation formula based on market data and stakeholder feedback.

Foster collaboration between the Cadastral Agency, the Tax Committee, the Ministry of Economy and Finance, and other relevant stakeholders.