If you own an apartment, you most likely have to pay property tax. And it’s not just apartments that are subject to this tax. Let’s discuss who pays personal property tax, when, and how to calculate it.
What is Property Tax in Russia?
Property tax is a fee paid to the government for owning real estate. Once you buy an apartment and register it under your name, you become the owner, and you have to pay for the right to own it. The more properties you own, the higher your tax obligations.
The tax authorities calculate property tax once a year. In the second half of the year, they assess the payment for the objects you owned in the previous year. The tax inspection issues a tax notice specifying what and how much you need to pay and sends it to the property owner.
What Needs to be Paid For?
Property tax must be paid annually. It applies to both residential properties (apartments, individual houses, rooms) and other real estate (such as parking spaces).
Rates
The basic tax rates are listed in the Tax Code. You need to pay:
- 0.1% of the cadastral value of the real estate for houses, apartments, rooms, garages, and parking spaces. For outbuildings on garden or subsidiary plots, you need to pay annually to the state.
- 2% for objects worth more than 300 million rubles.
- 0.5% for all other objects.
However, local authorities have the authority to adjust these rates. They can both reduce them to zero and increase them (but not more than three times).
Rates can also be adjusted based on the cadastral value of the property (setting value “thresholds” for each rate), the type of property, and its location.
Example
In Moscow, tax rates vary depending on the value of real estate. If the property is valued at:
- Less than 10 million rubles, the tax will be only 0.1% of its value.
- From 10 million to 20 million rubles, the rate increases to 0.15%.
- From 50 million to 300 million rubles, the tax is already 0.3%.
In St. Petersburg, for comparison, real estate valued at 20-300 million rubles is taxed at 0.25%.
How to find out the amount from which the tax is calculated?
Property tax is calculated based on the cadastral value of real estate. This is the official value of a property or house that is regularly reassessed. You can find out the cadastral value:
- Online, for example, through a service on the Rosreestr website, where you need to enter the address of the apartment or house. You can also use the cadastral number (specified in ownership documents).
- By ordering an extract from the Unified State Real Estate Register (EGRN) on the public services portal. This document will also indicate the cadastral value.
How to calculate the property tax?
Property Tax = Cadastral value of the property as of January 1st × Tax rate. Taking into account the tax deduction right away.
Example: Let’s say you have an apartment in Moscow with a total area of 85 square meters and no exemptions. The EGRN extract states that the cadastral value of the apartment as of January 2022 was 12.85 million rubles. In this case, the tax rate is 0.15%. Subtracting 20 square meters from the apartment area, the cadastral value decreases to 9.826 million rubles. Multiplying this amount by 0.15%, you get a tax amount of 14,739 rubles.
Can the tax amount be lower than calculated: tax deductions?
Yes, it can. There are tax deductions that reduce the taxable area. Accordingly, the cadastral value used to calculate the tax is also reduced. The amount of square meters that can be deducted depends on the type of real estate:
- Owners of an apartment or part of a residential house can be exempt from paying for 20 square meters of total area.
- Owners of a room or part of an apartment can exempt 10 square meters.
- Owners of an individual house can deduct 50 square meters.
Therefore, the tax amount can vary significantly among neighbors. For example, one apartment may be 40 square meters, and another may be 60 square meters. One apartment is 1.5 times larger than the other. However, after deducting the “free” 20 square meters in one apartment, there are 20 square meters left to be taxed, while in the other, there are 40 square meters. As a result, the tax amount in the second apartment will be twice as much.
When is it necessary to pay the property tax in Russia?
Property tax must be paid no later than December 1 of the following year. For example, for the real estate you owned in 2022, you need to pay the taxes by the beginning of winter 2023.
Penalties for those who have not paid on time
If property tax is not paid by the beginning of winter, the owner of the apartment or house may face a substantial penalty – 20% of the unpaid amount. Additionally, late payment may result in accruing penalties, calculated based on the key rate. For each day of delay, 1/300 of the Central Bank rate is accrued.
Example: In early November 2023, the key rate is 15%. Let’s say the owner of the apartment was charged a tax of 2,000 rubles. However, they decide to pay this amount not in November but only on February 1 of the following year. In this case, in addition to the 2,000 rubles, they will have to pay an additional 400 rubles as a penalty, plus 62 rubles in interest. In total, instead of 2,000 rubles, they will have to pay 2,462 rubles.
What will happen if you don’t pay the tax at all?
The tax authorities have the right to recover the unpaid amount, as well as penalties, interest, and expenses. Initially, a demand for payment is sent with a specified deadline. Subsequently, if the debt is not paid, enforcement proceedings may be initiated, and a freeze may be imposed on accounts. The overall limitation period for filing claims is three years.
Whether real estate can be seized for tax debts depends on the amount of the debt. There is a legal practice for the seizure of the sole residential property under certain conditions, primarily in cases of individual bankruptcy.
