Faculty of Real Estate Management

Real Estate Taxation in Russia Prof. Elena IVANKINA Dean, Faculty of Real Estate Management

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 ;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 Russia 123 Ingush Republic Chuckchi Administrative District Magadan Region Buryat Republic Kabardin-Balkar Republic 4 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 USALand taxes depend on state legislation 10-28% FranceLand 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 %. Reduction after 5 years of ownership. ItalyLand tax: % depending on cadastre value No GermanyEuros a year25-45% Great BritainNo40% (only for permanent residents of Great Britain)