Faculty of Real Estate Management

Real Estate Taxation in Russia

Prof. Elena IVANKINA

Dean,Faculty of Real Estate Management

ivankina@rane.ru

www.frem.ane.ru

Today and tomorrow of property taxes in the RF

In the past• Land tax on the basis of normatively established rate (RR/sq.m)• Corporate property tax on the basis of book cost • Personal property tax on the basis of inventory cost At present• Land tax on the basis of cadastre land value (since 2006)• Corporate property tax on the basis of book cost except intangible assets, stocks

etc. (since 2004) • Personal property tax on the basis of inventory cost

In prospect• Real estate tax to substitute the two existing taxes – land tax and personal

property tax• Real estate tax to be established on the basis of market value

Comparative analysis of property tax share in consolidated tax revenues of the Russian Federation

and the USA Russian Federation

Profit tax;15.1%

Social security taxes and dues:24.7%

VAT (value added tax);14.0%

Other taxes;7,0%

TMM (tax on mining minerals;12,6%

PIT (personal income tax);19,9%

Property taxes;

6,7%

USA

Corporate profit tax: 11.0%

Sales tax:7.7%Income tax:38.1%

Social security taxes and dues: 23%

Other taxes: 8,8%

Property taxes:

11,0%

2

Comparative analysis of property tax share in tax revenues of municipalities in the Russian Federation and the USA

Russian Federation USA

PIT: 69,3%

Sales tax: 13,1%

Corporate profit tax: 1,2%

TMM: 0,1%

Profit Tax:1,5%

Property tax: 71,4% Property tax: 17,9%

Other taxes;11.2%

Other taxes:9.3%

Income tax: 5,0%

Dependency of tax revenues on price of oil in 2006-2009

;l;j – Proceeds of taxes and dues in the budget system of the RF

- Average world price of oil - Proceeds of property taxes - Potential proceeds of property taxes

Tax revenues per capita in regions are rather different. For personal property tax the difference makes up 126 times

Average index in Russia123

Ingush Republic

Chuckchi Administrative DistrictMagadan Region

Buryat Republic

Kabardin-Balkar Republic4

Moscow

Tomsk Region

Vologda Region

Yaroslavl Region

St-Petersburg

Personal income tax revenues for 1 tax payer

Average index in Russia 749

Tax revenues per capita in regions are rather different. For land tax the difference makes up 118 times

Ingush Republic

Chechen Republic

Jewish Autonomous District

Buryat Republic

Moscow

Saint-Petersburg

Lipetsk Region

Belgorod Region

Moscow Region

Altay Republic

Land tax revenues for 1 tax payer

INNOVATIONS IN TAX LEGISLATION IN 2014

Introduction of taxation on commercial real estate (buildings) by cadastre value for floor space over 5000 sq.m

in Moscow 1.5% in other regions 1.0%

Examples of land, property and capital gain taxation

Annual property and personal fortune taxes

Capital gain tax in % of value increase

USA Land taxes depend on state legislation

10-28%

France Land and living floor space taxes (depend on local legislation)

Real estate as a main residence is not a subject for a capital gain tax. For foreigners 16-33%. Reduction after 5 years of ownership.

Italy Land tax: 0.4-0.7% depending on cadastre value

No

Germany Euros 150-300 a year 25-45%

Great Britain No 40% (only for permanent residents of Great Britain)