Russia to Issue New Property Tax Laws for 2013

May 13 – Current land and real estate tax might be replaced by new property tax laws in 2013 after the next presidential election in Russia.

According to Vedomosti, the new tax laws should become a basis for filling local budgets. The Ministry for Economic Development and Trade and the Ministry of Finance said the new tax will be collected from the real market cost of the property which is larger than official estimations of the Federal Bureau of Technical Inventory.

The new system for estimating market cost of a property is currently being developed. Independent appraisers are supposed to use this system for property value estimation. It is not yet clear how large the increase in property tax rates will be. “If the tax scale increases, prices might grow more than one hundred times,” said Taxadvisor partner Dmitry Kostalgin.

The cost of a new apartment Moscow could differ from FBTI estimates by 30 percent to as much as two times the figure, and for very old Stalinkas (Stalin period apartment houses) it could grow to 1,000 times, warns the head of irn.ru, Oleg Repchenko.

The President of City Economy Institute Nadejda Kosareva believes the first phase of reform should not only lead to an increase in tax, but in fairer tax burden distribution. “Stalinkas in downtown areas are estimated at a much lower value by FBTI than a new house in Moscow’s suburban area,” she said while pointing out that the reform should increase the property tax for old apartments and decrease payments for outlying districts apartments – which are new but not as pricey.

The FBTI is Russia’s biggest government institution carrying out real estate technical inventory. It serves both government entities and corporate customers. The institution is accredited to carry out technical inventory functions in 82 Russian regions and has approximately 14,000 employees.