The new tax for self-employed citizens introduced in Russia will pull a third of the property rental market out of the shadows, as the landlords will be required to pay tax, Blackwood commercial real estate brokerage said in a news release.
The government’s legislative experiment aimed at pulling self-employed citizens from the shadow market was launched on January 1 in four regions: Moscow and the Moscow Region, the Kaluga Region and Tatarstan. The new tax also applies to owners of rental properties. According to experts, this tax is much more convenient than the old tax system. If the owner rents out property to an individual tenant, as it happens in most cases, the tax will be 4%, while regular income tax is more than three times as high, 13%. However, most landlords still evade paying tax.
According to Blackwood experts, the new tax means the potential legalization of at least one-third of the rental contracts on the housing market in Moscow.
“In general, for the market, the new tax regime may result in a higher number of lots in the white zone, more long-term lease agreements – in short, a qualitatively new business landscape,” said Ivan Borodin, head of the city real estate rentals department at Blackwood.