Can the market value be lower than the cadastral value?
No law obliges the sale of real estate at a price necessarily higher than the cadastral price. The owner can sell it for 100 rubles, even if it costs millions. In Art. 555 of the Civil Code of the Russian Federation states that the purchase and sale agreement (hereinafter referred to as the PSA) must contain the cost of the apartment; it is determined by the seller, sometimes in agreement with the buyer, if there is a bargain. But the final decision in any case rests with the owner. The state does not control the procedure for setting prices for private property.
Note: it is not worth selling a house or apartment below the cadastral value, hoping to reduce personal income tax to zero. When calculating the tax, the provisions of Art. 214.10 Tax Code of the Russian Federation. If the property was purchased by the seller after 2021, and then sold at a lower price than 70% of the coefficient determined as of January 1 of the year in which the transaction was made, when calculating personal income tax, income is considered equal to the coefficient multiplied by a reduction factor of 0.7. If the price of the object is higher than 70% of the KS, but not more than the KS, personal income tax is calculated as standard: from the amount of income received by the payer as a result of the transaction.
Examples:
No. 1. The apartment was sold at a price below 70 percent of the KS, for 1 million, received as an inheritance. The size of the contract as of January 1 of the year of the conclusion of the policy agreement is 2,000,000, 70% of the contract is 1.4 million.
1,400,000 x 0.7 = 980,000 – the base from which the tax is calculated.
980,000 x 13% = 127,400 – amount to be paid.
No. 2. The apartment was sold at a price above 70, but below 100% KS. The size of the contract is 2.3 million, the sale price is 1.84 million. Received under a gift agreement.
1,840,000 x 13% = 239,200 – personal income tax amount.
When is it not necessary to pay tax?
You can apply for a tax deduction and not pay personal income tax at all. If the property was purchased by the seller with his own money, expenses incurred in making the purchase are deducted from the sale price.
There are other situations when, subject to the minimum period of ownership, the seller is legally exempt from paying personal income tax:
- 3 years if the apartment was received by inheritance, gift from a close relative, as a result of privatization, under a rent agreement.
- 5 years in other cases, including when purchased under a policy.
For example, if a person bought an apartment in 2014 and sold it in 2020, there is no need to pay personal income tax and file a declaration; the minimum period of ownership for tax exemption has been met.
If the property was purchased before 2021
The rule for applying a reduction factor of 0.7 when selling housing below the KS does not apply if it was purchased by the seller before 01/01/2016. The CC does not matter in this case. Personal income tax will be calculated on the basis of the actual price specified in the DCT, if the minimum holding period for tax exemption is not met.
Sale of real estate by a legal entity
Organizations can also sell real estate below the COP; this is not prohibited by law. The same rules apply as for individuals.
What to do if there is no cadastral value of the apartment?
Everything is simple here: if as of January 1 of the year of the conclusion of the Constitutional Court policy agreement has not been determined, the provisions of paragraph 2 of Art. 214.10 of the Tax Code of the Russian Federation do not apply. The tax is calculated based on the actual price; a reduction factor is not applied when selling real estate.
Buying an apartment below the cadastral value
If the real price of housing is indicated in the policy, the buyer does not bear any risks. Everything changes when the seller asks him to deliberately lower the price in order to pay him less personal income tax, but in fact receives a larger amount than indicated in the contract.
The buyer who decides to challenge the contract will receive only the amount indicated in it, unless he can prove that he paid more. A receipt for receiving money can be used as evidence, but there is no guarantee that the court will rule in his favor.
