How to reduce the property tax without breaking the law.

How to reduce the property tax without breaking the law.


The property tax of individuals is determined based on the cadastre value of immovable objects. In case local legislation does not define property tax rates, it is calculated on the basis of the maximum rates established at the federal level. "With regard to residential houses, unfinished construction objects, garages, commercial buildings with an area of no more than 50 square meters, the tax is calculated at a rate that does not exceed 0.1% of the cadastral value, 2% - for objects with a cadastral value of more than 300 million rubles, 0.5% - for the rest of the objects", - said the chief tax adviser of the law firm Tax Compliance Yulia Pavlova.


Citizens who are personal income tax payers may use the right to receive a tax deduction both when selling property in order to reduce personal income tax from the income received in the transaction, and when purchasing property in order to return the previously paid personal income tax to the budget. The main difference in the procedure for granting the deduction in these two cases is its value limit, said the consultant of the law firm Tax Compliance. According to her, when selling real estate, taxpayers can reduce income from the sale of the object by a fixed property tax deduction of 1 million rubles. (for residential houses, apartments, rooms, cottages, garden cottages, land) or 250 thousand rubles. (for other objects).

"Instead of applying this fixed amount of tax deduction, you can reduce income by the amount of confirmed expenses associated with the acquisition of the property. This condition also applies to the sale of objects received instead of vacated premises in connection with the housing renovation program in Moscow. The value of costs associated with the initial acquisition of the realizable asset, which can be applied in the calculation of the tax base for personal income tax, is not limited by the law", - explained the expert.

The right to apply the full property deduction applies to only one object in a tax period (calendar year), reminded Pavlova. She stressed that if several objects are sold per year, it is not prohibited to apply a property deduction for the first object and to reduce income by the amount of expenses associated with the acquisition of the asset for the second object.

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Yulia Pavlova

Major specialisations

Construction, FMCG

Chief Tax Consultant