Abstract: The subject of the research is the grounds for directions of improving physical entities' taxation (in particular, individual residential property taxation) based on their cadastral valuation and prediction of decision consequences using the method of simulation modeling. The object of the research is dependent and interdependent relations that may arise in the process of residential property taxation based on their cadastral valuation. The purpose of the research is to develop recommendations on how to improve the procedure of calculating and collection individual property tax (IPT) based on their cadastral valuation and using the method of simulation modeling. When developing the simulation model, the authors have applied the system dynamics approach that allows to reflect the difficult interdependent relation between individual property taxation elements in the process of individual property taxation based on cadastral valuation. The interface of working with the aforesaid model allows a real-time evaluation of management decision consequences in the process of individual property taxation prior to the moment they are put to practice. The authors offer their own simulation model for connecting budget taxation flows and the level of the population satisfaction based on the principles of system dynamics which allows to predict consequences of decisions that are made in the sphere of individual property taxation as well as to valuate measures aimed at keeping the balance of interests between the state, municipalities and households (economic entities).