CRITICAL ANALYSIS OF THE CURRENT REAL
ESTATE SYSTEM IN THE RUSSIAN FEDERATION: LEGISLATIVE FRAMEWORK AND ENFORCEMENT
Tshibola L.A.M.
Financial University
under the Government of Russian Federation,
Moscow,
Russia
Abstract. This
article discusses issues related to the real estate system in the Russian
Federation, namely: the legal norms on real estate (the Housing Code, various
legislative acts and initiatives), the issues of real estate taxation (basic
concepts, experience of world practice, and taxes in the Russian Federation).
Keywords: taxation,
real estate, cadastral value, legislative regulation, land issue, cadastral
system, legal norms.
I.
Introduction
State regulation
of the real estate market assumes multifaceted work of all systems of management
on a promising basis. The state acts on the real estate market in two roles. It
fulfills regulating function. Its task is to form an integral and consistent
regulatory framework for regulating the real estate market. There are four
meaningful goals the activities of the authorities to regulate the real estate
market:
-
Using
of real estate as an investment resource, and as an incentive to raise funds
from institutional and private investors in the economy,
-
Increasing
of efficiency (including profitability) of real estate using,
-
increase
of liquidity of real estate in the secondary market,
-
The
formation of a system of state control of the current economic activity of
local governments.
II.
The main legislative base of normative legal acts
relating to real estate.
1. The Housing Code - the main law.
The Housing Code
is the main law regulating relations for making transactions of the deals with
housing, as well as other actions that cause a change in rights or using of
living accommodation. In addition, the Housing Code regulates the transfer of
property from living to non-living and vice versa, as well as the competence of
the reconstruction or redevelopment of living quarters [6].
The Housing Code
determines the need to ensure the rights of citizens to housing, its security
and inviolability, the inadmissibility of arbitrary deprivation. It describes
the grounds for the emergence of housing rights and obligations, which include
transactions of sales contracts or the registration of inheritance. The Housing
Code defines ways to protect housing rights, including litigation in cases of
their violation. It also establishes the competence of authorities in the field
of housing relations. In particular, it states that state registration of
property rights for housing is compulsory.
The Housing Code
defines what is a dwelling and housing fund. It describes the conditions and
procedure for the withdrawal of the premises from the housing fund. Thus, the
transfer of a premise into a non-residential one is impossible, unless it is
possible to equip it with separate access, if someone resides in it or is part
of a dwelling. An apartment in an apartment building can be withdrawn from the
housing fund only if it is located on the ground floor or above non-residential
premises [6].
2. Other important legislative acts.
A large impact
on the development of the real estate market is provided by the free transfer
of property rights of real estate. According to the Civil Code, in carrying out
transactions with real estate, their obligatory notarization is required.
According to the Law "About Pledge" it is also required that a
mortgage agreement must be notarized.
The legislative
base of the real estate market continuously develops according to the changing
relations in the society. At present, the laws "About mortgage",
"About housing-cooperative cooperatives", "About participation
in collective building" and others play the important role in the
formation of relations in the market.
The law
"About mortgage" opened the way for mortgage lending in the territory
of Russia. It regulates the relations of banks and borrowers. The laws
"About housing cooperative cooperatives" and "About
participation in collective building" enable citizens to participate in
long-term programs for the construction of new housing. They determine the
responsibilities of developers who build new buildings using the capital of
property buyers. It should also be noted the law "About
privatization", which defines the legal basis for the transfer of housing
from state property to private property of citizens.
3. Legislative-legal initiatives of 2009-2012.
The concept of
creating a single federal system in the sphere of state registration of real
estate rights and state cadastral registration of real estate is approved by the
Government of the Russian Federation on June 11, 2009 and approved by Order No.
534 of the Ministry of Economic Development of Russia of December 18, 2009, as
well as an action plan ("road map"). The creation of such a system is
based on the established positive long-term experience in the functioning of
state registration systems for real estate rights and state cadastral
registration of real estate, as well as taking into account modern
international practices in the development of services in these areas. From 1
January 2017, Federal Law No. 218-FZ of July 13, 2015, "About state
registration of real estate" (Law No. 218-FZ), enacts large-scale changes
in the sphere of cadastral registration and state registration of rights to
immovable property. At the same time, there are some problems in the sphere of
cadastral registration and state registration of rights of immovable property [3].
The main
principle task of state registration of rights is to ensure genuine publicity
and reliability of the register. At the same time, the reliability of the
registry is not only h the principle of keeping the register but the quality of
the register provided by law.
Very important
problem is the difficulty of improving the procedure for conducting state
cadastral valuation of real estate, consideration of complaints related to the
results of determining the cadastral value. It should be noted that the
assessment of real estate for tax purposes, on the one hand, mass (cadastral),
on the other - individual (market). This unity is one of the problems that
prevent the creation of an optimal and harmonious methodology for its
evaluation in the short terms.
The using of
federal assessment standards is based on subjective approaches to the selection
of criteria for determining the price of land plots, as well as unreliable
information about their characteristics, leads to a distortion of the results
of the assessment. There are numerous cases when the cadastral price of
neighboring plots with the same type of using in one cadastral quarter differs
greatly. At the same time, the subjects of the Russian Federation bear
significant financial outlay for conducting cadastral estimation.
There are no
legislatively fixed norms allowing the executive authorities of the subjects of
the Russian Federation, acting as the customer of the state cadastral
estimation of land plots, to organize verification of the reliability and
objectivity of the assessment results or reject the results of the assessment.
There are
numerous facts of exceeding the cadastral value over the market value of land
plots. In this connection, appeals of taxpayers have become more frequent both
in the Commission for dispute resolution on the results of determining the
cadastral cost of land and in courts. There are many cases of non-payment of
land tax due to its significant overstatement.
At the same
time, the reduction of cadastral price for individual land plots within the
boundaries of one quarter, according to the decision of the Commission or the
court, leads to non-observance of the principle of "universality and
equality of taxation". The issue of improving the procedures for
determining the cadastral value of immovable property, as well as the
mechanisms of the appraisers' activity, requires further elaboration [3].
II.
Analysis of the consequences of tax administration and tax policy issues
1. The basic concepts of real estate tax.
Adam Smith
proposed to transfer the volume of the taxing from profits and wages to land
rent. This, to his opinion, was to contribute of investments in improving
production, to restrain price growth, and to lead to the redistribution of
duties in paying taxes mainly to the rich segment of the population of that
time - large landowners (landlords) [1]. Today, introduction of a new property tax
at its market value with simultaneous cancellation of existing property
payments (personal property tax, property tax of enterprises, and payment for
land) is very promising as one of the components of the ongoing tax reform.
Real estate for
tax purposes includes land plots, as well as related buildings and structures
that cannot be moved without violating their functional purpose. It should be
noted that the interpretation of the concept of real estate associated with the
tax in question may differ from that adopted in the legislation of a particular
country. Thus, the Civil Code of the Russian Federation (Article 130, paragraph
1) includes in the real estate not only buildings, structures and land, but
also aircraft, ships and spacecraft. But there are not considered in the
context of the concept of real estate tax [5].
There are also some definitions to speak about. The
market value of real estate - is the most probable price of this property in a
competitive and open market with all signs of a fair deal when the actions of
the seller and the buyer are prudent and competent and the selling price is not
affected by atypical factors. The estimated value of the property - is the
value of the property (real estate object) determined by the individual appraiser
or using standardized procedures of the so-called mass estimation for a certain
date based on its market cost.
2. The peculiarities of real estate taxation in the
world practice.
Today many
countries have accumulated rich experience in taxation of real estate. The
world practice has already worked out the basic principles allowing organizing
the taxation in the most rational way. These principles are more or less
reflected in the legislation of most countries. Among them, in particular, the
following:
-
The
objects of taxation are the land, buildings and structures, as they are
relatively easy to identify and identify, unlike movable property.
-
The
basis for calculating the tax base is the market cost of taxable objects, which
stimulates their economically most rational using.
-
In
determining the cost of real estate, isn’t used the individual evaluation of
each individual object, but a mass estimate based on the application of
standard procedures for calculating the price of objects for tax purposes. This
allows evaluating a large number of objects.
-
Exemption
is granted to either socially unprotected taxpayers, or by types of real estate
that provide for the implementation of public benefit activities, or for
objects in state (municipal) ownership, in order to avoid "shifting money
from one pocket to another."
However, the
specific features of real estate taxation can vary from one country to another.
In determining
the cost of objects for taxation, market information is usually used in one way
or another, but in some countries (France, partly the UK), the lease value (the
potential average annual value of rental income for real estate) is taken as
the basis, and in most other countries, applying the tax on real estate -
capital, that is accumulated, and not the average annual value of the object
[4].
The schemes for
granting exemption can also vary by country. So, in Denmark, South Korea,
Chile, Sweden, Japan, the privileges are applied only to real estate objects,
but not to taxpayers. In other countries, there is a combination of the both preferred
taxpayers, as a rule, are pensioners and invalids, in addition, in some
countries the income level of the taxpayer is taken into account. To the types
of real estate that are fully or partially exempt from tax, in most countries
are cultural objects, education, intended for public needs, public
administration, for religious purposes. Exemption from payment of taxes can be
given and for some fixed period with the purpose of stimulation of certain
types of activity. So, in Chile, Sweden, Japan and two US states the privilege
is granted for new buildings for several years, and in the Netherlands - for
the period of construction of the building [4].
As for the tax
rates, everything depends on the specific legislative and economic practice in
this or that country. Depending on the legally established method of
determining the tax rate, there are fixed and variable (budget) rates. Fixed
rates are set by the central authorities of a country and represent a certain
initial percentage of the taxable cost. At the same time, it is impossible to
determine in advance the amount of tax revenues, since the amount of the
taxable base varies from year to year. This procedure for setting rates has
been adopted in the UK, Indonesia, Chile, Sweden, South Korea, Japan. In other
countries (Australia, Canada, the Netherlands, the United States, France,
Switzerland), local authorities plan a real estate tax rate based on the
expected budget expenditures and the size of the available tax base. The tax
rate is thus a variable. In some cases, such as in the Netherlands and some
cantons of Switzerland, local authorities have the widest authority in choosing
the rates, in most other cases, there are national and regional regulations
that limit the minimum or maximum rate, or even and the other together. The
specific amount of the rate can vary by country from a fraction of a percent to
7-10% with tax ratios of 20-100%.
3. The tax on real estate in Russia: history and
modernity
The Russian Tax
Code establishes a property tax as a regional tax. It includes three separate
taxes: land tax, corporate property tax, property tax on individuals [7]. The
tax base is determined depending on the value of the property. There are two
categories of tax benefits: at the federal and regional levels. The real estate
tax existed in pre-revolutionary Russia. The tax reform in the field of land
taxes, conducted in 1921, touched only some of real estate objects. In 1926, a
decree "About the Payment of residential premises in Cities and Workers'
Villages" was adopted.
For legal
entities there is a similar tax on the property of organizations whose legal
regime is established by the norms of Chapter 25 of the Tax Code of the Russian
Federation [7]. The object of taxation in accordance with Article 401 of the
Code is the following property located within the municipality (city of federal
significance in Moscow, St. Petersburg or Sevastopol):
-
Housing
building;
-
A
dwelling (apartment, room);
-
Garage,
car place;
-
A
single immovable complex;
-
The
object of unfinished construction;
-
Other
building, structure, premise.
Accommodation
buildings located on land plots granted for the conduct of personal subsidiary,
summer cottage, truck farming, gardening, individual housing construction, belong
to housing buildings.
Starting from
the tax period of 2015 and until 2020, at the choice of the subject of the
Russian Federation, the cadastral cost or inventory cost, calculated taking
into account the deflator coefficient, which is established by the Ministry of
economic development of the Russian Federation, is used as the taxable base for
the personal property tax of individuals.
In choosing
cadastral price by the taxpayers, there are following rules:
-
for
apartments cadastral cost, reduced by the cadastral price of 20 square meters
of the total area of this apartment;
-
for rooms cadastral cost, reduced by the value
of cadastral price of 10 square meters of the area of this room;
-
for
a built-up house cadastral cost is reduced by the amount of cadastral price of
50 square meters of the total area of this apartment building (for the purposes
of calculating the tax, residential buildings located on land plots allocated
for personal subsidiary, summer cottage, truck farming, gardening, individual
housing construction, belong to residential buildings);
-
for
a single real estate complex, which includes at least one housing building
(dwelling house), cadastral value, is reduced by one million rubles.
At the same
time, the representative bodies of municipal entities (legislative
(representative) bodies of state authority of cities of federal significance in
Moscow, St. Petersburg and Sevastopol) are entitled to increase the amounts of
sizes specified in the Code.
In addition,
while calculating the tax during the first 4 years of applying the cadastral
cost, the lowering coefficients are taken into account.
In case of
applying the inventory cost, the tax base is determined in respect of each
taxation object as its inventory price calculated taking into account the
deflator coefficient on the basis of the latest data on the inventory value
submitted in accordance with the established procedure to the tax authorities
before March 1, 2013. Until 2015, property tax was paid until November 1.
According to the amendments to paragraph 1 of Art. 409 of the Tax Code from
2015, the tax should be paid before October 1.
The real estate
tax of individuals will be calculated based on the average market price of 1
m² of real estate and taking into account the tax rate, which can vary
from 0, 1 to 2%. In the regions today, property tax for a standard two-bedroom
apartment is about 700 rubles. After recalculating the tax under the new rules,
the amount will increase almost twice to 1120 rubles. The calculation was made
for an apartment of 55 m² with a tax rate of 0.1% and based on the average
market price per 1 m² of 32 thousand rubles, according to the Federal Tax
Service of Russia, and taking into account benefits. The owner of the apartment
will be entitled to a tax deduction equal to the cost of 20 m² of his real
estate [7].
As for
Muscovites, they will have to pay a more substantial amount. So, if the
cadastral value of 1 square meter of a metropolitan apartment is equated to the
market average, which now amounts to 160,000 rubles per 1 sq. m., and calculate
a tax for housing of 54 sq. m at a rate of 0.1%, it will amount to 5,440
rubles. This amount will have to be paid to the owners in 2020. But, during
these five years, the law provides for an opportunity to raise the tax rate to
0.3%, or reduce it to 0%. If officials in five years increase the tax rate to
0.3% of the cadastral value, then the tax on real estate of individuals in
Moscow will grow in 20 times. And from 1300 rubles in 2012 will reach 20
thousand rubles in 2020.
To calculate the
real estate tax for individuals, a differentiated system of tax rates will be
applied. Owners of shopping centers, office buildings and other commercial real
estate will pay tax based on the rate of 2%. The same rate will be applied to
calculate the tax levied on the owners who have registered the ownership of the
elite real estate. Under the category of "elite" gets a home worth
more than 300 million rubles. For housing buildings, dachas, apartments, rooms,
garages and outbuildings, car places and unfinished houses, regions will be
able to set rates from 0, 1% to 0.3%, or reduce it to 0%, which is unlikely.
The remaining real estate will be subject to a tax rate of up to 0.5%.
Conclusion
Thus, the
article examined the features of the real estate system in the Russian
Federation, namely: the legal norms on real estate (the Housing Code, various
legislative acts and initiatives), issues of real estate taxation (basic
concepts, experience of world practice, taxes in the Russian Federation), land a
question in the cadastral system of the Russian Federation.
Real estate is a
type of property that is legally recognized as immovable. The property of
origin includes land plots, subsoil plots and everything that is firmly
connected with the land including: buildings, structures, objects of unfinished
construction. All transactions in the real estate market are carried out on the
basis of the state-approved legislative framework. It includes the totality of
all legal acts relating to real estate. The contract of sale, lease, deposit,
concluded in violation of the law, is recognized as invalid. Under current
Russian law, real estate transactions are subject to compulsory state
registration and are considered to be concluded only on condition of such registration.
In Russia, the registration of transactions with real estate is conducted by a
special state body - the Federal Service for State Registration, Cadastre and
Cartography. Nowadays, the authorities are reforming the tax, financial and
legal management of real estate.
References:
1. Adam Smith, The Wealth of Nations Book V, Chapter 2 Of
the Sources of the General or Public Revenue of the Society, Part 2, Article I:
Taxes of the Rent of Houses URL: http: //wikisource.org/ wiki / The_Wealth_of_nations / Book_V /
Chapter_2
2. Federal Law No. 218-FZ of July 13, 2015, "About
state registration of real estate" (Law No. 218-FZ) - Electronic version.
- Access mode: http://www.consultant.ru/document/cons_doc_LAW
3. Koksharov I.V. Taxation of real estate: Russian and foreign
practice / / the practice of international business. - 2002. - No. 6.
4. Shandirov O.L. Taxation of real estate abroad // Finances. -
2001. - No. 8.
5. The Civil Code of the Russian Federation - Electronic
version. - Access mode: http://www.consultant.ru/document/cons_doc_LAW
6. The Housing Code of the Russian Federation from
29.12.2004 N 188-FZ (as amended on 03/04/2018) - Electronic version. - Access
mode: http://www.consultant.ru/document/cons_doc_LAW_51057/
7. The Tax Code of the Russian Federation (Tax Code of
the Russian Federation) of July 31, 1998 N 146-FZ.-Electronic version. - Access
mode: http://www.consultant.ru/document/cons_doc_LAW_19671/#p415
About the author:
Tshibola Lubeshi Aimée Murphie - PhD student at the
Financial University under the Government of Russian Federation, Department of Legal Regulation of Economic Activities, 125993,
Russia, Moscow, Leningradsky Prospect, 49; e-mail: onyxialokoto@gmail.com
Критический анализ действующей системы недвижимости в
РФ: законодательная основа и правоприменение
Аннотация.
В этой статье рассматриваются вопросы, связанные с системой недвижимости в
Российской Федерации, а именно: правовые нормы о недвижимости (Жилищный кодекс,
различные законодательные акты и инициативы), вопросы налогообложения
недвижимости (базовые концепции, опыт мировой практики, и налоги в Российской
Федерации).
Ключевые
слова: налогообложение,
недвижимость, кадастровая стоимость, законодательное регулирование, земельный
вопрос, кадастровая система, правовые нормы.
Список
литературы:
1. Адам
Смит, «Книга богатства народов» V, глава 2 «Источники общего или общественного
дохода общества», часть 2, статья I: Налоги на аренду домов URL: http:
//wikisource.org/ wiki / The_Wealth_of_nations
/ Book_V / Chapter_2
2. Федеральный
закон от 13 июля 2015 г. № 218-ФЗ «О государственной регистрации недвижимого
имущества» (Закон № 218-ФЗ) - электронная версия. - Режим доступа:
http://www.consultant.ru/document/cons_doc_LAW
3. Кокшаров
И.В. Налогообложение недвижимости: российская и зарубежная практика / /
практика международного бизнеса. - 2002. - № 6.
4. Шандиров
О.Л. Налогообложение недвижимости за рубежом // Финансы. - 2001. - № 8.
5. Гражданский
кодекс Российской Федерации - электронная версия. - Режим доступа:
http://www.consultant.ru/document/cons_doc_LAW
6. Жилищный
кодекс Российской Федерации от 29.12.2004 N 188-ФЗ (с поправками от 03/04/2018)
- Электронная версия. - Режим доступа:
http://www.consultant.ru/document/cons_doc_LAW_51057/
7. Налоговый
кодекс Российской Федерации (Налоговый кодекс Российской Федерации) от 31 июля
1998 года N 146-ФЗ. Электронная версия. - Режим доступа:
http://www.consultant.ru/document/cons_doc_LAW_19671/#p415