NATALIA KORNIENKO COMMENTED ON THE TAX DEDUCTION INITIATIVE FOR RESIDENTIAL LEASE

The Minstroy RF suggested to introduce a new tax deduction for Russians for residential lease. Natalia Kornienko, Head of Tax System Development Department of the Gaidar Institute, told to radio Sputnik how this measure will be implemented and whether it will help to stimulate the development of the rental market.

A new type of tax deduction could be launched in Russia, which will help bringing the rental housing market out of the shadows, as well as equalize the rights of tenants with real estate buyers. At the same time, it is proposed to reduce the state duty for registering a long-term lease agreement. According to authors of the state program, it will come into force in 2022, however, it is not clear when the new type of tax deduction will start operating.

“This initiative has been discussed for 5 years and it is logical that this time they approached it more decisively. This will be a deduction similar to a deduction of a social tax, for example, for medical or educational expenses. The taxpayer should submit the concluded lease agreement and the state will authorize a tax deduction in the amount of the lease payments,” stated Natalia Kornienko.

Moreover, the list of innovations proposed by Minstroy includes such measures as the construction of rented houses (to fulfill the task, the authorities will conclude contracts with private construction companies or use the mechanism of collective investments), provision of land on preferential terms, use of long-term lease instead of providing apartments granting ownership.

According to Minstroy, the enlisted measures will expedite the rate of the rental market development and enlarge the volume of construction up to 5000 000 sq.m. by 2030.