Impact of VAT and Transfer Tax on RE DCF's Gross/Net Market Value

Hi everyone,

I am new to Real Estate Valuation and currently try to wrap my head around the impact VAT and Transfer Taxes have on a property's gross & net market value following a DCF approach. I would really appreciate some help!

In the terminal value calculation, should the impact of transfer taxes be considered in the cash flow (e.g. reducing the gross terminal value)? E.g. in a jurisdiction in which seller has to pay the VAT, but the buyer has to pay the transfer taxes, would I consider the impact from both tax rates, VAT only or no tax rate? I have trouble understanding, why somebody would want to sell a property below fair value (gross terminal value) due to taxes.

Also, when summing up all the discounted cash flows, the result will be the fair value of the property, i.e. the value of holding the property instead of selling it. Consequently, in my opinion, I wouldn't want to sell the property, if I receive less than this fair value due to taxes. I would consequently consider the sum of the present value of cash flows (PV NOIs) as the net selling price (net market value) and add any tax charges I would need to pay (e.g. VAT) to derive the gross market value. However, in a quick & dirty valuation template I found, the PV of FCF is considered Gross Market Value, resulting in net MV after dividing by (1 + Transfer Tax), despite the asset being in a jurisdiction in which the buyer needs to pay transfer tax (i.e. Paris, France). Doesn't this imply that the current owner of the property would need to sell below intrinsic value - i.e. he would be better off NOT selling?

Can somebody please shed some light on the difference between net and gross market value as well as treatment of VAT and transfer taxes in valuation?

Thank you very much in advance!