Regarding the new rules for ‘freezing’ the cadastral value of real estate items
Pepeliaev Group advises that Federal Law No. 401-FZ dated 30 November 2016 repeals the rule that provides for the minimum cadastral value that was set in or after 2014 to be applied for taxation purposes between 1 January 2017 and 1 January 2020.
Please be reminded that Federal Law No. 360-FZ dated 3 July 2016 provided for the specific features of the results of a state cadastral valuation being applied that were obtained in accordance with Federal Law No. 135-FZ ‘On appraisal activities in the Russian Federation’ dated 29 July 1998 during the transition period between 1 January 2017 and 1 January 2020. During the specified period, the minimum cadastral value was to be applied that was set as at 1 January 2014.
Therefore, from 1 January 2017, the previous cadastral value which was set for 2014 was actually applicable. Further, such value was to be applicable until the next valuation in accordance with Law No. 237-FZ ‘On state cadastral valuation’ which is to take effect on 1 January 2017.
However, Federal Law No. 401-FZ dated 30 November 2016 has introduced changes into Law No. 360-FZ which provide that not all Russia’s constituent entities must comply with the rule regarding the application of the previous cadastral value. Under the new Law, the rule in question must be applied only by those constituent entities in which the supreme executive authority has made the corresponding decision to ‘freeze’ the cadastral value. Such decision must be made on or before 20 December 2016.
What to think about / what to do
The universally binding rule that the minimum cadastral value be applied has become one of the the powers of a supreme executive authority of a constituent entity of Russia. Russia’s constituent entities must decide before 20 December 2016 whether or not to apply the moratorium.
We believe that the constituent entities’ decision regarding the ‘freezing’ of the cadastral value depends on the effect it will have on the tax revenue in a particular constituent entity. This will depend on how the cadastral value of 2014 relates to the current cadastral value.
In this connection, we recommend that you keep track of the issue of whether the decision will be made in the near future to apply the ‘freeze’ in constituent entities of Russia in which your real estate items are located, for this may cause a change in your tax obligations.
Help from your adviser
Pepeliaev Group’s experts have extensive experience of advising and representing clients with regard to complying with Russian legislation on construction and real estate. Our lawyers are ready to provide comprehensive assistance and legal support in any matters related to how cadastral value is determined and applied.