Increasing the return from property taxes
Enabling faster detection of dubious real estate transactions
Increase your revenues by employing SAS software. The Patrimony Department of the Belgian Federal Public Service (FPS) Finance proves this is possible. SAS software enabled the department to significantly improve the detection of increasingly sophisticated and dubious transactions and hence collect more real property taxes.
The Patrimony Department of the FPS Finance has a broad range of activities, including among others legal security, patrimony services, and information collection and exchange. The Department gathers information regarding the extent, value, and ownership of real property from notaries and real estate agents. The information is used to create a survey of plans as well as a map and accurate description of properties sold. This information is collected primarily for fiscal reasons, but also for documentation of ownership. The Patrimony Department uses the data to evaluate whether the registration occurred according to law and that the selling price is realistic and acceptable. If irregularities are suspected, the individual case is investigated in greater detail and lost taxes can be claimed.
By migrating our analytical model to SAS, we significantly improved our efficiency and increased the detection of dubious real estate transactions.
Advisor at the Patrimony Department of the FPS Finance
Modeling real property data
Prior to 2003, the Patrimony Department investigated each individual real estate transaction on paper. This process consumed staff time and budget resources unnecessarily, but also permitted each employee to use their own subjective evaluation method. Guy Hofman, advisor at the Patrimony Department recalls, "In 2003, I started creating an analytical model to calculate the theoretical price of real property. The model takes into account eleven objective parameters for real property. These parameters include among others the location, the year of construction, and the total surface area. Using these criteria, the model can calculate an acceptable standard maximum and minimum price for each type of property. Every two weeks, we import all new real property transaction data into the model. The model then indicates possibly dubious transactions that we then investigate further."
Increasing performance of the model
The Patrimony Department's model improved the tracing of irregular property transactions. However, it was still rather time consuming. It took half a day to run the model, and it required manually performing many of the steps necessary to import the data into the model. In addition, it all had to occur before it could perform the correct analyses, et cetera. "We contacted SAS regarding ways to improve the performance of our methodology. Now with SAS, the selection of possible dubious transactions happens more or less automatically. We need to perform far fewer manual actions and as a result have more time available for other important issues, such as improving the model. Alongside its more highly automated process, the SAS model has far greater calculation power and hence processes big data sets considerably faster than the previous software," explains Hofman.
Learning from coaching and training
In addition to its software, SAS also had other important qualities to contribute according to Hofman. "As part of our long-term contract, we receive professional support in the form of coaching and training. This has proved to be very helpful. We were used to working with less comprehensive software and soon discovered that working with SAS demanded a greater degree of expert knowledge. However, after quickly acquiring this knowledge with the aid of the SAS team, we are now able to reap the full benefit of the many analytical possibilities now available to us."
Continuously working towards the future
Since the Patrimony Department began using SAS, there has been a significant rise in tax revenues from real property transactions. "The model is enabling us to potentially recover more than 200 million euros in lost property taxes per year. Moreover, corrupt behavior diminishes dramatically when people realize that we can now detect even the most sophisticated tax fraud far more effectively," observes Hofman.
Thanks to the vastly improved performance of the model, the Patrimony Department can reserve more time to keep improving its model and the collection of mandated real property taxes. Hofman notes, "We are currently investigating the practicality of using the Dutch hierarchic trend model for property valuation. This model uses three layers: the general price trend, the price trends for a combination of district and house types, and specific characteristics of the individual property. We will of course exchange ideas with our SAS consultants as we pursue this possibility."
Expanding activities to a European level
Besides continuously improving its efforts, the Patrimony Department plans to use the model within the framework of the new European directive regarding the exchange of fiscal information within Europe. "We intend to use the model to enhance the information collection on Belgian real property transactions by inhabitants from other European countries. In this way, we can expand our activities further and contribute to fiscal fairness and compliance," explains Hofman.
Improving and increasing the detection of dubious property transactions
- Increased revenues
- Better performance because of increased automation and greater calculation power
- Better decision making through continuous improvement of the model
- Software matters, but so does service. SAS training and coaching is important in acquiring the knowledge needed to reap all of the benefits available in the software.
- Continuously improve your model. We have been improving our model since 2003 and are continuously looking for ways to keep improving it.