As you know, the construction of a country house is a matter that requires considerable investment of money and effort; during a crisis, most of the unfinished country real estate is either “dead” capital or put up for sale by the owners. At the same time, today in the suburban real estate market there are quite often cases of fraud in the sale of land plots, houses and summer cottages, when sellers try to sell their real estate by any means, saving themselves from paying taxes and other mandatory annual contributions. In the article below, we will try to highlight the main fraud schemes in the field of selling country property and how you can protect yourself from dangerous transactions.
Condition of the individual housing construction project
Since 2004, Russian legislation has provided for the possibility of state registration not only of finished real estate, but also of unfinished construction projects, regardless of the stage of “frozen” construction. The main condition for registration is the presence of a solid concrete or brick foundation.
Important! An unfinished construction project cannot be legitimized if it is the subject of a valid contract.
NZS and property tax
Construction in progress (CUP) is an object for which construction work has not been completed.
The oil and gas station can be either in one of the stages of construction or in the stage of trial operation, or be suspended, mothballed or terminated. In any case, this means that the final cost of the object has not been formed, and it is not ready for full operation for the purpose for which it was created. But despite the certain inferiority of such an object, it may result in the obligation to pay property tax for both individuals and legal entities.
The main provisions for this tax are contained in the Tax Code of the Russian Federation (Chapter 30 - for legal entities, Chapter 32 - for individuals).
The property tax of organizations has regional status, and the tax on individuals has local status. Therefore, the features of taxation are established not only by the Tax Code of the Russian Federation, but also by the regulations of the constituent entities of the Russian Federation and municipalities, which can determine the features of the tax base, differentiation of tax rates (within the limits determined by the Tax Code of the Russian Federation), and the introduction of additional benefits.
ConsultantPlus experts explained in detail the nuances of taxing unfinished construction with property tax. Get trial access to the K+ system and upgrade to the Ready Solution for free.
Documents for registering an unfinished construction project
For state registration of an unfinished suburban real estate property, the owner must provide title documents for the land plot and permission to construct an individual housing construction project on this site. If these documents are not provided, a country real estate property may be recognized as a “squatter construction” subject to demolition. It is also necessary to provide a cadastral passport for the plot, which indicates its boundaries. The title documents for a land plot can be a certificate of ownership (from July 15, 2021, the issuance of certificates of ownership has been cancelled; if necessary, an extract from the Unified State Register is issued), a lifelong lease agreement or an agreement for the perpetual use of a land plot. If the site is leased and it is impossible to construct a capital construction project on it, legal registration of the unfinished house will not be possible even through the court. In addition, the lessor has the right to terminate the lease agreement early and demolish the construction site erected on the leased site. Accordingly, in order to avoid any problems in the future, when purchasing an unfinished construction project, the seller must provide the buyer with a certificate of ownership not only of the house, but also of the land.
In what account are unfinished construction works reflected?
At the stage of construction and installation work, all expenses that are during the construction period are investments in non-current assets.
Accounting for the developer's construction in progress in accounting is reflected in account 08 - “Investments in non-current assets”, which is intended to summarize all construction costs, which will later be transferred to the account with fixed assets to the contractor.
Account 08 is an intermediate element on which the costs for completing a specific project and its delivery are concentrated.
The contractor's expenses are reflected in account 20 “Main production”, the debit of which accrues all expenses. Every month, all materials involved in production are written off from the account at the original price, and if there is a balance in this account, it can be determined that the organization has construction in progress.
Categories of land permitting the construction of individual housing construction projects
Many citizens, not knowing the legal framework, build country houses on land plots that officially do not allow capital construction. Therefore, the buyer, before applying to the Russian Register for an extract, is recommended to make sure that the land plot on which the unfinished construction project is erected belongs to the appropriate category and has the appropriate type of permitted use. That is, a completed house or an “unfinished” house can be located within the boundaries of a settlement on the following categories of land:
- for individual housing construction (individual housing construction);
- for running private household plots (personal subsidiary farming);
- DNP (dacha non-profit partnership);
- SNT (garden non-profit partnership) with the right to build a residential building and live in it.
Important! Capital construction of residential real estate on land plots intended for gardening and agricultural production is not permitted.
Many owners of country real estate have a mistaken opinion about registering property rights, believing that first of all it is necessary to build a residential building on the site, and only later legalize this object on the basis of the law on dacha amnesty. It is noteworthy that the simplified scheme works without prior approval of the work from the local administration, however, this registration procedure is not possible with all construction projects. Accordingly, if you need to register the “box” of a country or garden house, you will most likely need a building permit, which can be obtained on the basis of a certificate of land ownership (or a lease agreement), a cadastral passport and an urban planning plan for the land plot (from August 2018 When starting construction, it is not necessary to obtain a building permit for the construction of individual housing construction projects).
In the event of a refusal to register ownership of an unfinished construction project under the dacha amnesty, the owner can obtain permission through the court by providing evidence that the object was built in compliance with all construction standards and does not pose a threat to the life and health of citizens.
If all documents for the land plot and the unfinished house are completed correctly, it is necessary to order a technical passport for the unfinished construction project, register it as “unfinished” in the cadastral register and register the ownership in the Unified Register.
It is worth noting that today the majority of Russians, owners of suburban real estate, including unfinished properties, are in no hurry to register construction on a land plot, especially since unfinished construction projects today are also subject to real estate tax according to the cadastre. Example. In Moscow and the Moscow region, the rate for unfinished construction projects is 0.3%. So, for example, the tax for a land plot of 10 acres in the Odintsovo district worth 6.8 million rubles according to the cadastre, the owner will have to pay a tax to the state treasury in the amount of 20.4 thousand rubles per year, respectively, if a residential building is being built on the site, registered in the Unified Register, the tax amount increases as a percentage relative to the cadastral valuation of the construction project.
Important! If, within 10 years after acquiring a land plot of the individual housing construction category, the owner has not registered a residential property on it, land tax is charged at double the rate, that is, 0.6%.
In the absence of a certificate of state ownership of an unfinished construction project, it will only be a set of materials that cannot be used as a subject of pledge, sale, gift or inheritance. The right to carry out such transactions legally appears only from the moment of state registration.
Property tax under NZS for legal entities
NZS objects at the disposal of legal entities are not subject to property tax if they are not ready for use in the production process. The fact of readiness is determined by the legal entity itself. However, this does not mean that the NZS object can be kept in the unfinished stage for as long as desired.
The trial operation stage is especially dangerous in this regard. If at this stage the necessary refinement of the object is not carried out (funds are not continued to be invested in bringing its technical characteristics to the design ones), and it is systematically involved in the production of products, then it is safer to include it in the fixed assets and impose a property tax. Otherwise, the Federal Tax Service may recognize it as an object of taxation, and the court will agree with it (resolution of the Arbitration Court of the Ural District dated March 12, 2015 No. F09-9720/14).
Objects that a legal entity builds independently, attracting borrowed funds for this purpose, will have different values in accounting and tax accounting due to different accounting of interest. It is important to maintain this difference when putting the facility into operation. Both values are important in their own way: tax - for calculating depreciation, which will be taken into account when determining income tax, and accounting - for calculating property tax, unless there is an obligation to calculate this tax from the cadastral value.
To learn about when the obligation to calculate tax based on cadastral value arises, read the article “For which real estate objects is the tax base calculated based on cadastral value?” .
What kind of house is called “unfinished”?
This is how people dubbed houses whose construction has not yet been completed . Such buildings are always cheaper than finished and commissioned houses, because we are talking about a structure in which it is not yet possible to live.
It can be just a foundation or a foundation and walls, or it can be a semi-finished house that already has a roof. In an unfinished house, all communications are often not connected.
The advantage of buying such a house is that it costs much less than a ready-made house. At the same time, there are also many pitfalls here.
The nuances of purchasing unfinished property
Below we offer clarifications on the most pressing issues related to the purchase of an unfinished house.
Is it possible to buy an unfinished house with maternity capital?
It is forbidden . Purchase/sale transactions for unfinished construction projects are not carried out with the involvement of maternal capital, even if it is an officially registered unfinished project.
In accordance with PP No. 862, housing subsidies are allocated for the acquisition of living space and improvement of living conditions. An unfinished property is not considered a residential property, so a family certificate cannot be used when purchasing such a property.
Is it possible to take out a mortgage on an unfinished house?
You can get a mortgage for an unfinished private house, but only if the property meets a number of conditions, namely:
- The house must be registered with the BTI cadastral register as an unfinished construction project.
- Construction must be at least 50% complete.
- You must provide the bank with a completed, agreed upon construction plan.
- Communications must be connected to the site.
To apply for a mortgage you need to collect the following package of documents:
- a copy of the work book with the seal of the organization and the signature of the employer;
- income certificate;
- documents for the collateral;
- documents for the guarantor.
Is it possible to register in a private unfinished house?
Registration in an unfinished house is possible if the property is found suitable for habitation . This means a certain degree of readiness of the building for occupancy, which is confirmed by acts of government agencies. In other cases, it will be impossible to register in an unfinished house.
So, buying an unfinished house can turn out to be a very profitable acquisition or, on the contrary, it will become a burden that you will try to resell to someone else.
To minimize risks, before choosing an unfinished construction project, contact experts who can conduct a professional assessment of the condition of the future home and calculate the approximate cost of completing it.
Why are they selling unfinished buildings?
Among the main reasons why unfinished buildings are sold are:
- the owner lacks funds to continue construction;
- plans have changed (for example, leaving for permanent residence in another country or another city);
- poor location of the site for supplying communications (hitches in paperwork, problems with installation, etc.).
If you want to buy an unfinished house, then it is better to choose a building that is being sold due to the owner’s lack of finances for further construction.
It is not advisable to purchase a “box” without a roof . In this state, the room quickly loses its operational characteristics: temperature changes, precipitation - all this negatively affects the unprotected building material.
