Consequences for the second owner of the premises if the first one plans to open an individual entrepreneur and rent out the space

Commercial real estate tax from 2021

This article will answer the following questions:

• what real estate is considered commercial;
• what changes related to commercial property tax occurred in January 2021.

What is commercial real estate

Commercial is real estate that is not residential or summer cottage, and is not a personal plot of land or a garage. Although an apartment or house can be considered commercial, provided that it is rented out. In general, the purpose of such real estate is to make a profit.

Commercial real estate includes:

• catering canteens;
• cafes, bars and restaurants;
• production workshops;
• shopping and entertainment complexes;
• administrative and office premises.

Such real estate can be divided by type:

• industrial (warehouses, hangars, workshops and other industrial facilities);
• social (medical centers, libraries, airports and others like them);
• residential premises for rent;
• buildings and premises for free use.

Commercial real estate is a taxable property. Its owner calculates and pays tax. Payment terms are determined by regional authorities.

Previously, the tax on commercial real estate was calculated based on its average annual value. Then calculations for some objects began to be carried out according to cadastral value. Now the following should be calculated:

• shopping complexes and administrative premises with an area exceeding 3000 m²;
• real estate of organizations or individual entrepreneurs located outside the Russian Federation;
• office rooms;
• catering premises with a hall area exceeding 150 m²;
• residential premises, garages, parking spaces, unfinished construction projects, as well as residential buildings, garden houses, outbuildings or structures located on land plots provided for private farming, vegetable gardening, horticulture or individual housing construction.

The premises listed in the last paragraph were introduced by the new law.

Changes in 2021

On January 1, 2021, Law No. 379-FZ came into force, which makes changes to the procedure for calculating property tax. In particular, the changes affected paragraphs. 4 paragraphs 1 art. 378.2 Tax Code of the Russian Federation.

Previously, changes should have been made to paragraph 70 of Art. 2 of Law N 325-FZ. The text of the changes sounded like this:

“Other real estate objects recognized as objects of taxation in accordance with Chapter 32 of this Code, not provided for in subparagraphs 1 - 3 of this paragraph.”

That is, if the cadastral value of the property is determined, then it is the “cadastral” tax on the property of organizations that must be paid, regardless of the average annual value, address and presence in the regional list. Based on the concept of “other real estate”, we can conclude that all commercial real estate of organizations should be included in the cadastral value calculation.

How to calculate the tax amount

The full amount of tax at the cadastral value is determined by the following formula:

TnI = Tax base × Tax rate

The amount of advance payments is calculated using the following formula:

AP = Tax base × ¼ × Tax rate

For example, the cadastral value of a real estate property is 20 million rubles. The tax rate is 1.5%. Then:

• annual tax amount - 300,000 rubles (20,000,000 × 1.5%);
• advance payments for the first quarter, half a year and 9 months will be equal to 75,000 rubles (20,000,000 × ¼ × 1.5%);
• the amount of tax payable at the end of the year is 37,500 rubles (300,000 – 3 × 37,500).

If ownership arose or ceased during the reporting period, then the amount of tax is determined based on the number of full months of ownership.

Formula for calculating advance payments:

AP = Tax base × ¼ × Tax rate × Number of full months of ownership of the property in the reporting period/3.

Formula for calculating the total tax amount for the year:

NnI = Tax base × Tax rate / Number of full months of ownership of the property in a year / 12.

The wording introduced by paragraph 70 of Art. 2 of Law N 325-FZ, did not provide a clear definition and raised many questions. For this reason, changes introduced specifically to paragraph 2 of Art. 1 of Law N 379-FZ. Thus, the list of property, the tax base of which is determined as the cadastral value, was supplemented with specific examples.

Answer

An individual must pay VAT if he is engaged in entrepreneurial activity by renting out his own non-residential premises without registering as an individual entrepreneur.
This position is supported by the Federal Tax Service of Russia and the judicial authorities (for example, Information of the Federal Tax Service dated October 4, 2021, Determination of the Investigative Committee on administrative cases of the Armed Forces of the Russian Federation dated July 20, 2018 No. 16-KG18-17, Determination of the Armed Forces of the Russian Federation dated August 1, 2018 No. 301- KG18-6363). An individual lessor can obtain the status of an individual entrepreneur and immediately switch to a simplified taxation system. It should be noted that if an individual receives income from business activities (rent payments) during a period when he did not have the status of an individual entrepreneur, the risk of additional VAT, penalties, and fines for the corresponding period remains (for example, Resolution of the Supreme Court of the Russian Federation dated 01.08 .2018 No. 301-KG18-6363).

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All real estate can be safely divided into residential and non-residential. The first refers to houses and apartments in which people directly live. And the second group is represented by commercial real estate, the main goal of which is to make a profit.

The name, of course, already creates a certain picture in the head, but this is not enough. Therefore, in our article we will tell you all the most important information about non-residential premises briefly and factually.

Commercial real estate – what is it?

In general, let's say for starters that any real estate is something that is connected to land. By adding the word “commercial”, one can logically assume that some kind of financial benefit will be derived.

Any person or entrepreneur can become the owner of a company. You can organize work in the premises, or you can simply rent it out. On average, the payback period for commercial real estate varies from 7 to 10 years. Then we can talk about net profit.

We have already described commercial real estate and its distinctive features in more detail here.

Kinds

Non-residential premises are divided into several types. Belonging to one or another group is determined by purpose and use. Agree, an office rented by a travel company will be very different from a restaurant premises. Therefore, we will study all types in more detail.

What kind of transactions are there with non-residential premises?

Commercial real estate is an asset that needs to be used to make money. Therefore, it is important to immediately think about how a person will achieve this goal.

He may well buy a premises for himself and work there. But if he understands that he does not have the strength, time and knowledge to use it effectively, then he can turn to more advantageous options.

Rent

Non-residential premises are not the cheapest asset. Not everyone can afford to buy it. Small firms are much more willing to rent real estate to avoid global costs.

The owner receives a stable income, and the other party can safely conduct its activities in a territory convenient for him without any special investments.

Purchase and sale

If you want to get rid of real estate or purchase it, then this is also quite possible. You have the right to sell your own car or house. The situation is similar here.

You just need to take care of the reliability of the buyer/seller, make inquiries about his business and ask about the reason for buying/selling the premises.

Don't rush into completing the deal. Such property in new buildings reaches a cost of several million rubles. It would be a shame to reduce the price or, on the contrary, to pay more.

Why sell KN?

There can be many reasons for selling real estate:

• Urgently need money;
• The previous tenant refused to cooperate, and finding a new one is problematic;
• You are no longer interested;
• You are moving and you don’t need extra cargo;
• You are going through a divorce process in which you need to divide your jointly acquired property;
• You bought a property with the intention of resell it at a higher price (you made repairs and set a higher price), etc.

Taxation 2021

Real estate tax is a regional payment, so all income goes to the regional budget. It is at this level that they decide what the payment will be and for whom.

Today, the generally accepted norm is to calculate the tax on IP based on the cadastral value (sometimes book value).

How to calculate tax on non-residential premises

For individuals and legal entities, the rates are completely different. A citizen will always pay less, and this is logical.

To calculate the amount of tax, you need to multiply the percentage from the “Tax” column by the cadastral value of the property. The amount of tax from individuals is calculated by the Federal Tax Service.

TAX = cadastral value x % (from the table).

For legal entities the situation is slightly different. They a priori pay more. But the tax should not exceed 2% of the cadastral value and 2.2% of the book value.

TAX = cadastral value x 2%.

An individual sells non-residential premises - what is the tax?

When manipulating real estate (selling, leasing), an individual pays 13% of the transaction amount.

If the contract is concluded for a period of more than a year, then the person must send +22 thousand rubles to the tax office.

Moreover, individuals cannot regularly rent out their property until they register individual entrepreneur status. This is considered a business activity.

What is the tax on individual entrepreneurs who sell non-residential premises?

If an entrepreneur worked under the simplified tax system (simplified tax system), then he can sell the property by paying 6%. However, in another case he will have to allocate 13% of the cost.

Much depends on the taxation system. In addition, the region has the right to set its own standards. But in general they are about the same.

What are the benefits for selling CN?

On special grounds, commercial real estate can be used by:

• IP on “simplified” (USN);
• religious centers;
• educational institutions.

The list may be wider in a particular region, so it is worth considering the situation there.

How to sell non-residential premises without taxes

In many constituent entities of the Russian Federation the following are exempt from taxes:

• unions;
• pensioners and disabled people;
• WWII veterans and labor veterans;
• participants in the liquidation of the consequences of the tragedy in Chernobyl, etc.

But these citizens are not guaranteed complete tax exemption; it may be partial.

Any citizen can take advantage of a tax deduction of up to 250 thousand rubles.

Non-residential premises are areas whose use is aimed at obtaining financial benefits. It can be rented, donated, sold.

For individuals, individual entrepreneurs and legal entities, sales taxes are different. Much depends on regional authorities. Therefore, it is better to clarify such questions on an individual basis.