Misuse of land for tax purposes
The Federal Tax Service recalls the tax consequences of using land for other purposes.
If a land plot intended for individual housing construction is not used for its intended purpose, but is actually sold in entrepreneurial activity, the taxpayer loses the right to apply a reduced tax rate (Article 394 of the Tax Code of the Russian Federation) in the amount of not more than 0.3%.
According to the Classifier (Order of the Ministry of Economic Development of Russia dated 09/01/2014 No. 540), the types of permitted use of such sites include the placement of houses, garages and outbuildings on them, as well as the cultivation of crops.
As noted by the Ministry of Finance of Russia (letter dated February 21, 2019 No. 03-05-06-02 / 11312), reduced tax rates are set for individuals who directly use land for private housing. If such a plot is used in entrepreneurial activity or is intended for resale, then its taxation is carried out at a rate for “other” lands - not more than 1.5%.
When the state land authorities recognize a land plot intended for agricultural production not to be used for its intended purpose in accordance with the conditions stipulated by the decree of the Government of the Russian Federation, it also applies to it (Letter of July 16, 2014 No. 03-05-04-02 / 34879) the tax rate for “other” lands from the beginning of the tax period in which the decision on the offense was issued to the beginning of the tax period when it was eliminated.