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- The house in which: who is at risk of an increase in taxes on land for residential housing
The house in which: who is at risk of an increase in taxes on land for residential housing
The Constitutional Court of the Russian Federation has begun considering a civil complaint about the procedure for calculating land tax for plots for individual housing construction (IHS): developers of such houses complained that they were required to pay tax several times more than builders of high-rise buildings. This precedent creates legal uncertainty for thousands of citizens who are building private homes for personal residence. The dispute concerns the legality of applying the 1.5% rate together with the increasing coefficients 2 and 4, which can increase the fiscal burden by twenty times compared to the basic conditions. Details can be found in the Izvestia article.
What is considered by the highest instance of law
A company from Kazan is challenging the procedure for calculating land tax for residential housing plots in the Constitutional Court of the Russian Federation. The reason was the additional tax for the year: the inspectorate applied a rate of 1.5% and increasing coefficients of 2 and 4, citing a violation of construction deadlines. A developer from Tatarstan insists that for residential housing land, the tax should be calculated at a rate of 1.5% without coefficients, and for houses of blocked—up buildings (connecting several of the same type of residential buildings in one row with a common side wall or walls without openings) - at a discounted rate of 0.3%, since these are different formats with different tax regimes.
The arbitration courts of three instances rejected the developer's claims, supporting the position of the Federal Tax Service and referring to the amendments to the Tax Code of 2020, according to which commercial organizations lost the right to a preferential rate of 0.3% for residential housing plots if the land is used in entrepreneurial activities.
The Kazan company disputes the provisions of Articles 394 and 396 of the Tax Code of the Russian Federation, arguing that the combination of the 1.5% rate with coefficients 2 and 4 creates an excessive fiscal burden disproportionate to the objectives of tax regulation. The Constitutional Court's acceptance of the complaint means the beginning of a separate trial, the outcome of which may set a precedent for reviewing approaches to calculating land taxes for developers across the country.
When the 1.5% rate applies to an ordinary homeowner
For a citizen who has purchased land for residential housing, builds a family residence facility on it and strictly adheres to the intended purpose of the territory, the risks of applying an increased rate remain minimal. However, if commercial facilities such as a car service station, a tire repair shop, or a guest house that accepts guests for a fee are located on the site, the tax service receives a legal basis for transferring the entire land to a rate of 1.5%. In such situations, the fiscal authority proceeds from the actual use of the territory, and not only from formal entries in the cadastral register.
The second typical reason for recalculation is related to the presence of a construction business under the guise of residential housing. When an individual acquires a large land mass in a prestigious area, divides it into several small plots, builds facilities and promptly sells them to third parties, the Federal Tax Service qualifies such a scheme as systematic profit-making, said Alexander Yudin, a lawyer at the St. Petersburg Bar Association. In this case, the inspectorate will not only charge personal income tax according to the rules for individual entrepreneurs, but also recalculate the land fee at an increased rate.
The key protection tool for the taxpayer is control over the cadastral value of the land, since the base rate and all increasing coefficients are calculated from this value. If an unjustified charge is detected, the owner must send a written objection to the inspection, and in case of refusal, consistently appeal the decision to the courts. Practice shows that tax authorities rarely enter into protracted disputes with citizens who are building a professional legal position.
Personal or commercial: cases that will help you figure it out
The distinction between personal construction and commercial exploitation is based on two criteria: the consistency of transactions and the initial goal of making a profit. A one-time sale of one or two real estate objects over several years, as a rule, does not raise questions from regulatory authorities. However, if a citizen registers ownership of three or more houses and implements them in a short time, the inspection is highly likely to initiate an inspection.
Sergey Sosnovsky, head of the Pepelyaev Group tax practice in St. Petersburg, gave an example: the construction of five houses on five plots practically eliminates the possibility of proving the absence of an entrepreneurial character. The situation with two objects, when one is used by a family and the other is intended for sale, already creates an ambiguous legal position and carries certain risks. If the second facility was initially rented out, and an adult family member subsequently moved into it, the tax authorities will evaluate the totality of actions individually.
The source also drew attention to a legal nuance that allows the tax authorities not to formally raise the rate, but to increase the total amount of the payment.
— The coefficient is multiplied not by the rate, but by the preliminary tax amount in order to calculate the final amount. This gives the Federal Tax Service grounds to say, "We are not saying that the rate should be 6%." The argument is not devoid of a peculiar legal grace, but the result changes from changing the places of the multipliers," the expert noted.
The sale of two houses on adjacent plots under personal circumstances will not qualify as entrepreneurial activity. In this case, a citizen will have an obligation to pay personal income tax on the amount received, but the land tax rate is not adjusted, added Vladimir Saskov, an expert at the Institute of Tax Management and Economics of Real Estate at the National Research University Higher School of Economics. The systematic use of short-term rental housing or, for example, the placement of catering facilities without changing the type of permitted use in the registry is the most obvious trigger for fiscal verification.
Retroactive recalculation
The recognition by the Constitutional Court of the contested norms that do not comply with the Basic Law will create a legal basis for correcting the current practice of accruals. Nevertheless, the possibility of refunding funds for previous tax periods for individuals is currently limited by legislative deadlines. Vladimir Saskov clarifies that increasing coefficients of 2 or 4 for citizens using residential housing plots for business purposes can be applied exclusively starting from the tax period of 2026.
This means that the calculation taking into account these multipliers will take place for the first time in 2027, therefore, there are no grounds for demands for recalculation for earlier periods from private owners. In the case of a judicial act in favor of a taxpayer, the rates and coefficients are changed only for the period that directly appears in the case. The legislation does not provide for an automatic review of charges for all years of ownership of the site.
In order to exercise the right to refund overpaid amounts, a citizen must send a reasoned statement to the Federal Tax Service with a copy of the court decision that has entered into force. The amount to be refunded is calculated based on the difference between the tax paid at the increased rate and the amount that was payable according to the regulatory indicators recognized by the courts as not complying with the law. The process of chargebacks is regulated by the general rules of tax legislation and takes up to one month from the date of registration of the application.
Izvestia sent a request to the Federal Tax Service, but no response had been received at the time of publication.
Online verification: how to find out your bid
You can get up-to-date information about the applicable land tax rate remotely using the official digital services of the Federal Tax Service. On the portal nalog.gov.ru There is a reference section that allows citizens to independently check the amount of payments and the availability of preferences. The user needs to select a land tax category, specify the reporting period, region, and specific municipality, after which the system will display the set rates with links to regulations.
Yulia Dymova, Director of the Est-a-Tet Department of Secondary Real Estate, recommends additionally requesting an up-to-date tax receipt in the taxpayer's personal account. This document provides full details of the calculations, allowing you to understand for what periods and on what grounds the obligations were formed. If discrepancies are found with the data of the Unified State Register of Real Estate, the owner can send an objection via electronic form or by registered mail with an extract from the register attached.
The deadline for consideration of appeals regarding incorrect accrual is up to thirty calendar days from the date of registration of the application.
Local benefits
The land tax belongs to the category of local payments, which grants municipalities and cities of federal significance the right to independently set differentiated rates within the framework of legislative restrictions. Local authorities may introduce additional preferences for individuals, reducing the fiscal burden on certain categories of owners or certain types of use of territories. Yulia Dymova explains that in practice, rate reductions are rare, since municipalities are interested in maintaining the volume of revenue collected, but there is still a legal possibility for such measures.
The spread of conditions applied in different regions is quite significant: in some municipalities, a minimum rate of 0.1% applies to owners of a single plot, in others, the base rate of 0.3% remains with a limited list of categories of beneficiaries. To obtain the established preferences, as a rule, it is not necessary to submit separate applications, since information is transmitted from local governments to the tax service automatically. Nevertheless, to confirm the right to benefits, it is recommended to independently check the preferences section in the FTS help desk and, if necessary, send a clarifying request.
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