The 32nd provision of the Tax Code of the Russian Federation came into force on January 1st. It introduces a new method of individual property tax assessment. Citizens must pay taxes on land and apartments according to their cadastral value. The tax is assessed with interest of less than 0.3% of the cadastral value of an apartment, garage or car parking place, and will grow by 20% annually. Thus, by 2019, it will grow by up to 2000 rubles.
Valentina Matviyenko, Chairwoman of the Federation Council of the Federal Assembly of Russia, explained that the system that was implemented for many years was a system in which the location and quality of the housing were not taken into account, it is clearly outdated. And today the transition of calculating the tax on the property of individuals on the basis of the cadastral value is proceeding quite fast. Since last year the new system was introduced in 28 constituent parts of the Federation, this year another 21 regions joined.
A property tax on the basis of the cadastral value of property started to work even earlier, in 2014. It should be clearly understood that the transition taking place today bears not only a fiscal, but also, first and foremost, a social function. At the legislative level the federation establishes the right to vary the rate of the property tax for legal entities and individuals within the specified values.
“Unfortunately, all at once, which is described as squeezed-out pedal to the metal, set the rate at the maximum allowable level. While we can only speak about the preliminary results, a number of problems have been clearly manifested. The most, I think, the most important is a lack of transparency and the subjectivity of the definition of the cadastral value of objects that, to say the least, causes justified discontent. The task of the federal and regional authorities is to eliminate such errors. As President of Russia Vladimir Putin emphasized, the transition to the cadastral value should be understandable, clear, transparent, and should not reflect negatively on citizens and individuals,” the Chairwoman of the Federation Council said.
Last year the Federal Assembly adopted a series of legislative acts aimed at improving the cadastral valuation system. Thus, for example, the law which establishes new requirements for professional work in this area introduced compulsory membership of cadastral engineers in the self-regulatory organizations, and established a procedure for pre-trial appeals on the suspension of the cadastral registration decisions, as well as a law on criminal and administrative liability for providing false information in the technical and design documentation. “Now it is an imperative to ensure the use of an accurate and clear methodology for determining the cadastral value of objects and arrange reliable state control over the activities of appraisers. It is necessary to improve the quality of services for cadastral registration and the state registration of rights, encourage the development of the principle of the provision of the system of these services on the principle ‘one window’. And also to decide the introduction of a unified accounting registration procedure,” Matviyenko said.
According to her, another problem is that at the moment we have about 50% of all apartment buildings in need of repair: “It is hardly possible to solve this massive problem exclusively through government efforts. Considerable legislative and organizational work was done to establish a new order of organizing and financing capital repairs, involving the citizens themselves. Almost all regions formed their own regulatory and legal framework, created by regional operators, adopted a program overhaul, the collection of the contributions of the owners of premises is growing. The average collection rate in the country reached almost 80%. In total, over the course of two years citizens contributed more than 50 billion rubles for repairs. As a result, more than 20 thousand homes were repaired. More than 4.5 million people improved their living conditions.”
Matviyenko admitted that not everything is well with the contributions in all the regions of the Federation: “The payment rates are determined by the regions and the ranges are very different. It is, of course, necessary to be flexible and adjust rates depending on the prevailing socio-economic situation, but all the same it is necessary to ensure control over the validity of a minimum size at the federal level. One way to solve the financial problems in the housing sector could be the use of a credit facility overhaul. However, with the introduction of such mechanisms the risks of new debtors arise. And therefore we must clearly understand what to do. It is obvious that such loans must be issued on preferential terms. The state, represented by the federal and regional authorities, should subsidize the interest on them to solve the most acute social problems of bringing residential buildings into proper condition.”
