In the former Soviet satellites, considerable private ownership remained under communism, but the formal cadastral systems were not maintained and the recording of property rights is still far from complete. During the Soviet period, land was treated separately from buildings, and this practice has continued in some countries, making real estate units more difficult to assemble for investment purposes. While housing and business privatization has progressed to a degree in all countries, the release of land to private ownership and especially to ownership by foreigners has been a contentious issue. In Russia, although the Constitution and Civil Code provide for private property, the government and the Duma have failed to agree on a Land Code to provide a legal basis for land ownership. Most countries have placed some restrictions on foreign ownership, but permit long-term leases.
Land taxation offers a potentially broad and expanding revenue base as privatization continues.
In the absence of secure property rights and developed property markets, most countries have taken an incremental approach to incorporating market-based elements into their property tax bases. With the exception of Estonia, the countries in this study levy taxes on the basis of land or building area, adjusted by coefficients related to location, population, usage or other factors not derived directly from market indicators. Plans for an ad valorem tax in the Slovak Republic await further fiscal, governmental and market reforms. Estonia's strong ideological commitment to a market economy led its Parliament to take the bold step in 1992 to base its land tax on market value. The first valuation assigned price zones to each assessment area, with the expectation that the methodology could be refined as understanding of real estate markets improved and as the markets matured.