The short game: how Russians try to circumvent the property tax

Russians are increasingly forced to pay taxes at cadastral value instead of market value, said economist Alexei Krichevsky. Therefore, the long-standing trick of underestimating real estate for sale no longer works, the expert explained. The details are in the Izvestia article.

Basic schemes

"The tax on the sale of real estate is taken from the larger of two values — from 70% of the cadastral value or from the price in the contract of sale," said the economist. According to him, this means that you cannot sell an expensive apartment for 1.5 million rubles — you will have to pay the tax at the cadastral value. Thus, the state protects itself from unscrupulous sellers of real estate who sell housing at low prices.

The real estate seller underestimates the cost of housing for the sole purpose of reducing the amount of tax, while if the price drops by more than 20-30% of the real market value, there is a risk of additional tax, says Marina Nikitkova, partner at LAGOMLEX law firm.

— However, there is also a reverse situation, when a buyer who does not have the funds for an initial mortgage payment agrees with the seller to increase the value of real estate purchased with mortgage loans by the amount of such a contribution, which he subsequently makes to the bank, which is also illegal, — Nikitkova told Izvestia.

Russians who want to "save money" choose two schemes — artificially lowering or overestimating prices, says Yulia Makarenko, deputy director of the Banking Development Institute and real estate expert.

— An attempt to lower the official sale price to reduce the amount of tax payable is a popular scheme. The lower the sale price, the lower the tax burden. In order to do this, Russians use a scheme (more often with an additional cash payment), although later they become disappointed, since the Federal Tax Service recalculates the tax according to the cadastral value. The seller may also be in trouble with the law if the incident is classified as a crime. It's doubly disappointing if the sale actually happened at this price, for example, because of the urgency. But it's almost impossible to verify this," she said.

The second scheme, price gouging, is used when they want to defraud banks.

"It is most common in individual housing construction, where there are no clear evaluation criteria, especially for non—standard projects," the lawyer continues, "by overestimating the cost of an object, the borrower applies for a larger mortgage loan, the difference from which he uses at his discretion, for example, to deposit and receive illegal income. For attempting to defraud the bank, the borrower may face charges of fraud, and the transaction may be declared invalid. The entire amount taken will have to be reimbursed in a short time.

Other ways to "save money"

There are various ways to underestimate the cost of housing for sale, for example, you can challenge the cadastral value set by Rosreestr through the court, if the cadastral value decreases, the tax will decrease, says Sergey Kudinov, a lawyer specializing in tax disputes.

According to him, some sellers draw up a separate contract for the property itself, in which they indicate part of the cost, this contract is registered in the Federal Register, and the rest of the cost is formalized by an additional agreement or a separate contract for various improvements, for example, the cost of repairs.

"In this case, the buyer risks not getting the full amount back upon termination of the transaction," the lawyer added.

They'll find everyone

Any attempt to manipulate the price of an object in order to reduce the tax burden qualifies as a violation of tax legislation. At the same time, each participant in the transaction risks incurring their share of responsibility under articles either for tax evasion or fraud, recalls Ekaterina Kosareva, managing partner of the analytical agency VMT Consult.

— At the same time, it is difficult to deceive the state. The existing IT infrastructure of the Federal Tax Service allows using the Rosreestr databases to automatically track how much the cost of sold housing differs from the market, and with significant deviations it will attract the inspector's attention," she says.

According to her, the bank can also point out the discrepancy.

— A credit institution that is ready to issue a mortgage may become suspicious through internal monitoring of loan applications and market data. Most likely, such an application will either be refused, or they will require an additional set of documents that will help justify the price up or down," the analyst added.

New laws help to uncover cases of abuse. So, since January 2025, when registering real estate rights, the price of the transaction must be indicated in the new application form for registration of the right, says Ilya Vasilchuk, a judicial lawyer, an expert on the security of electronic transactions and real estate transactions, a public figure.

— This is primarily due to the fact that the system helps to automatically identify transactions with an obvious underestimation or overestimation of the value of real estate, — he says.

According to the expert, the attackers do not fully understand the serious consequences of such "savings".

— If the case goes to trial, such a buyer will most likely be found in bad faith by the court, as he deliberately violated the law. The court may invalidate such a transaction. And then the apartment will be returned to the seller, and the buyer will receive only the amount specified in the contract. Among other consequences, the tax service, if it detects a situation with underestimation, has the right to charge additional tax at the rate of 70% of the cadastral value (and in some regions — at the rate of 100%), — says the lawyer.

Izvestia sent inquiries to the Federal Tax Service and the Ministry of Energy, but no responses had been received at the time of publication.