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The guidance on real estate taxation is clarified. How and when will the discount of reference prices from 1 percent each year be implemented?

2024-01-18 09:37:18Biznes SHKRUAR NGA REDAKSIA VOX

The guidance on real estate taxation is clarified. How and when will the

The new formula for taxation of real estate in case of sale is adopted, including a 1% discount of the value for each year of use, but the discount will not be more than 30% of the reference prices.

Pursuant to the new law "On income tax", the Ministry of Finance and Economy and the State Cadastre Agency published in the Official Gazette the joint instruction "On income tax from the alienation of real estate".

The instruction enters into force with the beginning of the effects of law no. 29/2023, "On income tax", amended.

The directive stipulates that the discount of 1% per year will be applied to all types of real estate, such as: apartments, shops, covered parking and basements, open parking, open swimming pool, open sports facilities, constructions for industrial activity , such as: factories, warehouses, warehouses, silos, refrigerated warehouses of food products, as well as construction, which are used for agriculture and animal husbandry, or support activities.

For all these reference price buildings, 1% of the value will be deducted for each additional full year of use, starting from the date of acquisition of title for the first time.

"The 1% discount will be applied to all types of real estate mentioned in letters "a" to "dh" of this point. This discount should not be greater than 30% of the reference price defined in annex no. 1 of the decision of the Council of Ministers no. 132, dated 7.3.2018, "On the methodology for determining the taxable value of real estate "building", the tax base for specific categories, the nature and priority of information and data for determining the tax base, as well as criteria and rules for the alternative assessment of the tax liability", the instruction is quoted.

The instruction stipulates that in cases of sale of buildings (excluding apartments and constructions benefited by legalization) with amortization coefficient above 50%, the value of the sale of real estate for tax purposes will be determined by licensed real estate appraisers , and will be considered by ASHK only once (for a completed transaction). In cases where the value of the building assessed by a licensed appraiser is less than half of the value determined according to reference prices, for the effect of the sale value of the property, the value determined by the licensed appraiser is taken into consideration.

In the following, the reference price is determined depending on the form of use and the type of real estate:

a) Flats - the reference price of a flat is determined based on the reference prices provided in annex no. 1 of the decision of the Council of Ministers no. 132, dated 7.3.2018, "On the methodology for determining the taxable value of real estate "building", the tax base for specific categories, the nature and priority of information and data for determining the tax base, as well as criteria and rules for the alternative assessment of tax liability and the age of the building. For residential apartments in buildings privatized by law no. 7652, dated 23.12.1992, "On the privatization of state housing", amended, the price per square meter is 50% of the price according to the areas of the table, only in the case of the first sale. In this case, the deduction of 1% of the value for each year of use does not apply.

Example no. 1 - Sale value of the apartment with sales contract

The individual AA sells to the individual BB a residential apartment, which is located in the city of Tirana, in the administrative unit no. 2, area 2/4. Where the apartment has an area of ​​75 m2, and the year of obtaining the ownership title of this property for the first time is 2004. The apartment is sold with the sales contract dated August 20, 2024 and the total sales value of the apartment specified in the contract is 7,500,000 ALL. Sale value To determine the sale value, we judge the type of property being alienated and the alienation process.

Since we are dealing with the type of property, a flat, and the alienation of the property takes place with a sale contract, then to determine the sale value, we will compare the reference price of the apartment with the value in the sale contract: * The value of the apartment according to the prices of reference = 75 m2 * (120,300 ALL/m2 – 1% * 19 years from obtaining the property title for the first time * 120,300 ALL/m2 ) = 7,308,225 ALL Given that the value according to the sales contract is greater than that according to reference prices, the largest value, ie 7,500,000 lek (sale value), is taken as the sales value for the tax calculation.

b) Building for economic activity - the reference price per m2 of construction area for economic activity, trade and service is 1.5 (one point five) times higher than the price of residential areas by city. In this category, commercial units are also included, where mixed processes of production, trade or retail service are also carried out at the same time. In the areas included in the Municipality of Tirana, this coefficient is 2 (two) times higher.

Example no. 2 - Sale value of the building for economic activity with sales contract

Individual AA sells to individual BB a shop (commercial unit), which is located in the city of Librazhdi. This store has an area of ​​60 m2 and is sold with a sales contract dated 15.02.2024, where the total sales value is 3,000,000 ALL.

The year of acquiring the ownership title of this property for the first time is 2015. Sale value To determine the sale value, we judge on the type of property that is alienated and on the alienation process.

Since we are dealing with the property type building for economic activity and the alienation of the property takes place with a sales contract, then to determine the sale value we will compare the reference price of the store with the value in the sales contract: * Value of the store (trading unit) according to reference prices = 60 m2 x (44,000 ALL/ m2 – 1%* 8 years from the acquisition of the property title for the first time * 44,000 ALL/ m2 ) x 1.5 = 3,643,200 ALL.

Since the value according to the reference prices is greater than that according to the sales contract, the highest value is taken as the sales value for the tax calculation, i.e. 3,643,200 ALL (sale value)

c) Construction for covered parking and basements – the price per square meter of construction area for covered parking and basements is 70 (seventy) percent of the price of residential apartment surfaces by city.

ç) Construction for open parking facilities, open swimming pool, open sports facilities - price per square meter of construction area for open parking facilities, open swimming pool, open sports facilities, such as: football fields, mini-football, basketball, volleyball, tennis, golf, tracks for various sports competitions of athletics, motor racing, horse racing and others similar to them; ports and airports of any category, for the entire built surface that they occupy, is 30 (thirty) % of the price of the surfaces of residential apartments according to cities, or according to administrative units for the Municipality of Tirana.

d) Construction intended for industrial activity - price per square meter of construction area intended for industrial activity, such as: production, processing or storage of raw materials, semi-products or finished industrial products, such as: factories, warehouses, warehouses, silos, refrigerated warehouses of food products (excluding those of trading and service units), as well as other similar objects, is 50 (fifty) % of the price of the residential areas of the respective area, according to cities or according to administrative units for Tirana Municipality.

This category also includes buildings that serve non-public educational activities of any level, as well as closed sports facilities, including closed swimming pools.

dh) Construction, used for agriculture and livestock, or supporting activities - the price per square meter of construction area, used for agriculture and livestock, or supporting activities, such as: collection, storage and preservation of agricultural and livestock products, is 30 (thirty ) percent of the price of the housing surfaces of the respective area, with the exception of food processing.

2.1.2 In the case of the alienation of the ownership right over the land, this sale value, for the purpose of calculating the tax liability from the alienation of real estate, will be compared with the price per square meter of surface, determined in the value map according to the by-law in force on the date of conclusion of the contract.

If the price per square meter of surface according to the land sale contract is less than the price per square meter of surface, defined in the map of values ​​according to the by-law in force on the date of the conclusion of the contract, for the effect of the tax calculation, the prices according to the map of values ​​in force are taken into consideration.

Example no. 3 – Sale value of land alienation with sales contract

Individual AA has acquired 20,000 m2 of agricultural land in cadastral area 1271, Divjak Municipality, with law no. 7501, dated 19.7.1991 "For the land", amended, with the AMTP issued in 1994 (the date on the AMTP is 2.5.1994). At the time of receiving the land, individual AA did not pay any purchase price, as he received the land free of charge based on law no. 7501, dated 19.7.1991.

In 2024, this person sells the land to the buyer BB with the sales contract dated 10.1.2024, with the value of ALL 7,280,000. Sale value To determine the sale value of agricultural land, we compare the price determined in the value map according to the by-law in force on the date of the contract with the sale value determined in the contract.

The value of the agricultural land, according to the value map = 20,000 m2 x 364 ALL/m2 = 7,280,000 ALL Since the value according to the value map is equal to that according to the sales contract, as the sale value for the tax calculation, the value is taken according to sales contract 7,280,000 ALL (sale value).

Purchase value To calculate the minimum land purchase price, the sale price of 364 ALL/m2 is divided by the inflation index according to the relevant year in annex no. 1 attached to this instruction.

Specifically, for 1994 the index is 3.625. Then, the purchase value of the property of 20,000 m2 is: (20,000 m2 x 364 ALL/m2) : 3,625 = 2,008,276 ALL Calculated tax The tax that the AA seller must pay is: (sale value - purchase value) x 15% (7,280,000 –2,008,276) x 15% = ALL 790,759

2.1.3 In case of simultaneous sale of the plot of land and the building within this plot of land, for the purpose of calculating the tax liability, the value of the tax liability from the sale of the building and the value of the tax liability of the sale of the plot of land will be calculated separately.

Since the tax liability is calculated separately, the sale value in this case will be calculated separately for the building and separately for the land, according to the provisions of paragraph 2.1.1 for reference prices for buildings and paragraph 2.1.2 for prices according to the land value map. 2.2 In cases of exchange of immovable property, which occur between individuals, the value for sale will be considered the value of the property that is benefited from the exchange process.

This sale value of the property, in the case of buildings, will be according to the reference prices provided in paragraph 2.1.1, and in the case of the benefit of the land, it will be according to the map of values ​​defined in paragraph 2.1.2. 2.3

In cases of inheritance, donation and relinquishment of property, the value for sale will be considered the greater value between the nominal value and the market value of the real estate. The nominal value of real estate shall be considered the last value on which tax was calculated by the body responsible for the registration of real estate.

For buildings, if there is no value on which tax has been paid, the nominal value will be considered the cost of use in the year of registration of the deed in the cadastral register. The market value will be considered the value of the property according to the reference prices provided in paragraph 2.1.1 for buildings and in the case of the benefit of the land it will be according to the map of values ​​according to the provisions of paragraph 2.1.2.

Exceptional cases

3.1 The following are not subject to "personal income tax" from the transfer of ownership rights over real estate: a) entrepreneurs (builders) in the field of construction, registered as a business in the CKB, regardless of their status ("legal entity" or "natural commercial person"), who have part of their economic activity and who build for the purpose of selling or renting; b) investors in the field of construction, who finance the construction product for the purpose of sale, in cases where they are registered for business purposes in the KKB (are equipped with NIPT) and have been assigned tax responsibility.

3.2 The entities mentioned in the letters "a" and "b", paragraph 3.1 above, are payers of: a) local tax on the transfer of the right of ownership for real estate, according to the provisions in article 28, of law no. 9632, dated 30.10.2006, "On the local tax system", amended; b) tax according to the provisions of law no. 29/2023, "On income tax".

3.3 In order to eliminate the possibilities of tax avoidance and abuse of the principles of the tax law, the following persons pay tax on personal income from the transfer of ownership rights over real estate: a) investors in the field of construction, who finance the construction product, for the purpose of sale in cases where they are not registered with the CCA and the tax administration (they are not equipped with NIPT) and they have not been assigned tax liability; b) natural commercial persons, who obtain the construction, use/use permit and construction registration in their name as individuals, regardless of the fact that at the moment they start selling the construction product, they are provided with NIPT, "natural person" or despite the fact that they then close NIPT and continue sales as individuals.

 


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