Valuation for taxation
Valuation of property for taxation purposes in Iceland can be traced back to the year of 1096, when the Church was given the power to collect property tax based on valuation of land. Since 1976 the law on registration and valuation has provided that the value of real properties shall be the market value (cash) as of November of each year. New values are thus generated annually in November, taking effect on the following December 31.
Registered sales contracts form the basis of new values, where the sale prices are calculated to cash value. The valuation, which takes effect every December 31, provides the basis for determining property tax for each municipality. It is also included in the net property tax, stamp duty on property sales and heritage tax to the state. In 2001, the Iceland Property Registry conducted the first revaluation of all real estate in Iceland since 1977, in order to adjust valuation to actual market prices and to update obsolete registration items in the Iceland Property Registry.
Valuation for fire insurance
These valuations are derived from cost based valuation data models, managed by the Iceland Property Registry. Such valuation models take into account depreciation of building materials and the cost of reconstruction based upon the price of building materials and construction work. Valuation for fire insurance also provides the basis for compulsory catastrophe insurance.
In 1994, the Iceland Property Registry partly took over the role of valuation fire insurance and since 1999 is the sole authority for fire insurance valuation. In order to update and coordinate previous values for fire insurance, the Iceland Property Registry conducted a total revaluation of houses in 2001.