Recommendation points
In 2013, we are expecting the introduction of a new tax on real estate, representatives of the Ministry of Economic Development and the Ministry of Finance have already announced this more than once. The new tax is expected to replace the two currently existing Is land tax and property tax.
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- Tax reform is approaching
- How the new tax will affect ordinary citizens
- What awaits us
Marinus van reymerswaele. Tax Collector. 1542
The new tax was supposed to be taken from the market value of real estate objects, and not from the estimated value given by the BTI, as it is now. Now there is also information about the introduction of a progressive rate.
So what awaits us in 2013 with the introduction of a new tax. This is what we will try to figure out.
Tax reform is approaching
Back in May last year, the Ministry of Economic Development and the Ministry of Finance agreed on a plan for the tax reform, according to which the Ministry of Economic Development and Rosreestr will develop a methodology for the mass appraisal of real estate. At the moment, Rosreestr is compiling a unified real estate cadastre, which will assess all capital construction projects in the Russian Federation. By the end of 2012, the government plans to submit appropriate amendments to the Tax Code for consideration by the State Duma. And in 2013 a new property tax will have to come into force.
What will eventually be the rates of the new property tax is not yet entirely clear. According to experts, if the current progressive scale for property tax is maintained, the tax payment for some real estate objects may increase more than 100 times. So, in Moscow, the market value of apartments in new high-rise buildings (up to 5 years) can exceed the BTI estimate by 30% to 200%, and the difference in the valuation of very old apartments can be up to 1000 times. In addition, there are still a number of inconsistencies, for example, the “stalinka” in the center of Moscow can be estimated by BTI specialists much cheaper than a new building in Biryulyovo. Whereas the situation with market prices for this property will be just the opposite. And due to the introduction of a new tax, the payment for the “stalinka” can rise sharply, and the payment for an apartment on the outskirts, on the contrary, slightly decrease.
Alexander Khrustalev: Tax on luxury housing should be more than tax on standard apartments.
Many experts believe that tax reform is needed, only when setting the rate, all the subtleties must be taken into account. Now the developers of the tax reform say that the tax rate will be progressive, and elite housing will be taxed according to a different scheme from social housing. Alexander Khrustalev, the general director of NDV-Nedvizhimost, agrees with this program of the authorities, who believes that the introduction of a progressive tax on real estate is justified and is the best option. In his opinion, the tax on luxury housing should be more than the tax on standard apartments.
In general, tax reform in any case requires a careful approach. After all, it is necessary that the project be socially thought out and fair for the most diverse segments of the country’s population. Legislators also need to carry out competent work to overcome resistance to such changes on the part of citizens, who do not always accept such changes favorably, and many fear a significant increase in the tax burden, which may eventually become unbearable for many..
Ivan Vladimirov. Food appropriation. 1869 – 1947
However, many experts are inclined to believe that these changes are necessary. Among them is Aleksey Demyanchuk, director of the First Construction Trust, who claims that it is imperative to revise the current system of real estate taxation. As he notes, the widespread world practice of applying a real estate tax with a progressive rate indicates that this financial instrument can be quite effective both for the needs of the state and for regulating the real estate market, as well as protecting the interests of homeowners themselves. The progressive rate is generally fair, as opposed to the same tax for all.
We can only hope that when developing a tax reform program, all the points that real estate specialists pay attention to will be taken into account..
How the new tax will affect ordinary citizens
In spite of everything, the introduction of a new tax, nevertheless, may affect the well-being of low-income categories of citizens. For example, someone will inherit an apartment, or a pensioner grandmother who lives in a multi-room apartment in the center of Moscow will not be able to afford high taxes. In this case, many will have to move to less prestigious areas, which is not very convenient and not very pleasant..
Another negative point, which was noted by the General Director of Veles Capital Development Vladlen Voloshin – this is something that no one is yet considering the impact of the introduction of a new taxation system on the value of the subsistence minimum, which should be changed depending on the growth of the tax burden on the population, but there are no such plans at the moment.
As noted above, all factors must be taken into account in order for the new property tax to not bring ruin to the poor in the country. As one of the options, experts propose the introduction of a special social rate for low-income citizens. Some even propose to abolish the tax for certain categories of the population of the country or provide that the tax will not be levied on certain types of real estate if they fall under a number of established parameters.
As for wealthy citizens, the introduction of a new property tax is unlikely to hit their pockets hard..
Many specialists fear the so-called middle class. The use of an ill-conceived tax policy in the field of real estate taxation can hit this category of citizens the hardest. Indeed, many people belonging to this segment of the population are now buying apartments, as they can afford to improve their living conditions. But whether they will be able to pull an increase in the tax burden, this question is now very difficult to answer.
What awaits us
Unfortunately, now no one will be able to accurately predict the consequences of accepting or not accepting all of the above proposals, since we do not have actual indicators, methods and technologies available that could allow us to qualitatively and fairly implement the theory..
Vasily Maximov. Arrears Auction, 1880-1881
As you can see from the above, the prospects are still very vague and vague. None of the experts at the moment can answer exactly what this tax reform will turn out to be. – you just have to wait.
However, there are still a number of unclear points..
These points include the desire of the authorities to move away from the inventory approach to determining the value of real estate to the market one, which should make the real estate market as a whole more transparent. This is a positive point, however, another question arises. The process of creating a unified register of real estate objects, in which all objects will be valued at their market value, is still extremely difficult, and not entirely clear. Everyone knows that the market price Is a variable quantity. It changes depending on the market situation. And how the division of real estate into elite and non-elite will take place is also not entirely clear. It is here, according to many experts, that the greatest injustice of the upcoming tax reform may lie.
However, as the government has repeatedly stated, these innovations are aimed at making the distribution of the tax burden more equitable between categories of citizens with different income levels. They also assure that the owners of social housing do not expect any increase in the taxes paid. This, of course, is the advantage of this program, but how this will be implemented in practice is also not entirely clear..
It should also be noted that any tax changes are perceived by our population with a grain of salt, fear and irony. However, if the developers of the new tax program approach the project carefully and wisely. And if they think over the differentiation of tax rates for real estate tax quite clearly, it can turn out to be an excellent market regulator and a tool to stimulate effective management of your real estate. In any case, the law must take into account the interests of all citizens, regardless of their social status.
What are the potential implications of the new property tax? Will it primarily affect homeowners or also impact renters? How will it be calculated, and will there be exemptions or relief measures for low-income individuals? Are there any proposed reforms to ensure fairness and prevent excessive burdens on certain communities?