Together with the latest amendments to the law “On Real Estate Tax”, significant limitations are introduced in application of decreased real estate tax rates (from 0.2% to 0.6% of cadastral value) to residential buildings owned by businesses if the buildings are not leased for residence and lease rights are not registered in the Land Book. If both these conditions are not met, real estate tax will be calculated on the basis of the usual 1.5% rate of the cadastral value of a residential building. Note that implementation of these changes does not have a transitional period – tax for 2014 will be calculated on the basis of Land Book data fixed on 1 January 2014. If a business person registers lease rights in the Land Book by 1 July 2014 for agreements concluded before 1 January 2014, the municipality will adjust the tax.
Starting from 2014, the present tax relief will not apply to state-protected cultural monuments that are not maintained in compliance with the requirements of cultural monument protection, and tax will be calculated on the basis of the standard 1.5% rate of the real estate tax. Note that a building classified as a building causing harm to the environment may attract the increased 3% top real estate tax rate on the higher of the cadastral value of the building or of the corresponding land.
Additionally, some changes adopted as to real estate tax have the features of penal sanctions. For example, newly constructed buildings not put into operation may attract the increased 3% top real estate tax rate on the higher of the cadastral value of the building or of the corresponding land. The tax will apply starting from the month after expiry of the construction permit. This procedure must be confirmed in municipal binding regulations by 1 November 2014 and will then apply as of 1 January 2015.
As of 2015, the one-year relief from tax for newly constructed buildings and reconstructed buildings will be revoked.
We recommend noting the tax payable in order to prevent tax debts, as well as timely putting into operation of newly constructed buildings in order to avoid the increased tax rate.