According to Kommersant, the Russian government has submitted to the Duma amendments to the residential property tax. The local state authorities could implement a new approach from 2015 and calculate the tax from the cadastral value, with a rate of 0.1% for residential estates. Exemptions cover 20sqm for flat ownership, 10sqm for a room and 50sqm for a house.
The paper refers to the Federal Tax Agency about the potential increase in the average property tax, from RUB 642 at present to RUB 1,900, based on the new methodology. However, the final increase in the blended metrics depends greatly on the cadastral value, rates and exemptions that are set by the local governments. Overall, the three fold increase in the average tax burden, as well as the modest scope of the proposed exemptions, are downbeat for residential demand and are likely to cause downward pressure on the growth in prices across key markets.
Nikolay Kovalev, Maria Kolbina
VTB Capital analyst
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