The Russian Government is optimizing real estate legislation. Including a value-added tax into a real estate assessment has been recognized as illegal, according to a ruling of the Russian Supreme Court.
Judges believe that VAT must not be counted in the evaluation of real property. Otherwise Russians will have to pay a tax on tax. Currently, the VAT amount is often included in the property’s cadastral value. Subsequently, the amount of the property tax depends on this value. As a result, the cost of real property goes up by 20%, RBC reports.
Now the legislation is ruling out including VAT into the market value. However, experts believe this may be a case for confusion as some appraisers will still include VAT into the price. Therefore, property owners are advised to read all documents more carefully.