Photo: freepik.comOver the past year, real estate prices have continued to rise, and this trend in the market will also affect taxpayers who will have to allocate more money for property tax from January 1, 2023.
On Tuesday, the city government in Belgrade decided to increase the property tax to five percent. Councilors of the City Assembly adopted amendments to the Decision on the amount of the property tax rate, which stipulate that the tax for natural persons for the next year can be increased by a maximum of five percent compared to the obligation from this year.
The amount of tax depends on several factors, primarily on the type of real estate owned by the taxpayer and the zone in which it is located. Namely, the property tax is determined based on the average price per square meter of the corresponding real estate in the zone, which is determined by the city. It is formed on the basis of real estate prices realized in the market, and the amount of the obligation depends on the usable area of the real estate, the age of the building and the tax rate.
Although the majority of citizens are familiar with these regulations, the problem for many of them is the calculation of taxes. Tax lawyer Dr. Minja Đokić explains in an interview for Biznis.rs that the difficulties in calculating property tax arise from the legal rule according to which the basis of property tax for real estate of a taxpayer who does not keep business books (more precisely, for citizens and individuals) is the value of the property that determined by the local tax administration.
"That value is determined on the basis of several criteria, the most important of which is perhaps the average price of the corresponding real estate by zone on the territory of the local self-government unit. In other words, the information that the local tax administration has, but the citizens do not have, is the average price at which real estate - houses, apartments, business premises - were sold in a narrower territory such as a municipality or a city. For example, Belgrade is divided into 14 zones, so the value of real estate is determined separately for each of those city zones," he points out.
Đokić believes that the state, bearing in mind the exponential growth of real estate prices, should adopt a proactive tax policy in order to calm the housing market. As he points out, the management of public finances does not only mean collecting taxes, but also a reasonable redistribution of "wealth" from all those levies.
"It would be socially responsible to seriously consider the introduction of a complete tax exemption on a single home, while at the same time progressive taxation of each subsequent square meter that a citizen owns." For example, full tax exemption from property tax on 25 square meters per household member. Thus, a three-member family (a young married couple with a child) living in an 80-square-meter apartment would be exempt from property tax on 75 square meters, they would pay tax on five square meters, and if they bought another apartment, the tax rate on that property would be larger," he explains.
REDUCTION OF DEPRECIATION LIABILITY AND TAX CREDIT
When it comes to property tax reduction for natural persons, citizens have two options available - reduction through depreciation and the so-called tax credit.
"For citizens as taxpayers, there is legal depreciation (depreciation) which is recognized at the rate of one percent per year using the proportional method, and at most up to 40 percent," explains tax lawyer Minja Đokić.
According to him, the amount of the basis is affected by whether it is construction, agricultural or forest land, an apartment, a residential house, an office building, a garage or auxiliary facilities such as wells, swimming pools, boiler rooms, basements...
"Perhaps the biggest benefit for citizens who own real estate is the so-called tax credit - the amount by which the tax liability is reduced. Namely, the established tax on the residential house or apartment where the taxpayer lives and where his residence is registered is reduced by 50 percent, and a maximum of 20,000 dinars. In other words, if two people, for example a young couple, live in the same apartment, but each of them owns an apartment, it may prove to be tax optimal if they each have their registered residence in their own apartment," Đokić points out.
"In practice, mistakes are often made when it comes to what citizens consider to be the moment of tax liability, and what is the tax-relevant moment." The basic rule is that the liability for property tax arises on the earliest of the following days: the day of acquisition of the right on which the property tax is paid, the day of establishment of the state when the tax is paid on the state, the day of the start of use, the day of training, the day of issuing the use permit, i.e. on the day of enabling the property to be used in another way," explains Đokić.
Thus, for example, when the basis of acquisition is a lifetime maintenance contract, the date of acquisition is considered to be the date of death of the recipient of maintenance. In the case of a legal transaction, for example a sales contract, the day of acquisition is considered the day of conclusion, regardless of when the new owner is registered in the real estate cadastre. The tax return is submitted within 30 days.
WHAT ARE THE PENALTIES FOR NON-PAYMENT OF PROPERTY TAX?
Đokić says that it should be borne in mind that the property tax of citizens is determined by the decision of the local tax administration. This is important because there is a tax offense that involves punishing a natural person who fails to pay the tax determined by the decision of the Tax Administration with a fine in the amount of 50 percent of the determined tax, not less than 5,000 dinars.
"However, in addition to the penalty for a tax violation, citizens should know that in the case of non-payment of taxes, forced collection can be initiated and that then the tax debt is increased one-time by five percent, and late interest is also calculated on the due and unpaid tax." Legal protection in that case is very limited, especially considering the practice of the Administrative Court, which in tax cases did not show an understanding of the numerous specifics of the tax-legal relationship", adds Đokić.
WILL THE VAT REFUND FOR FIRST-TIME BUYERS BE ABOLISHED?
Although the property tax is a special form of taxation, it cannot be viewed in isolation, Đokić assesses and adds that it is very certain that Serbia will have to harmonize its tax policy with European rules.
"One should take into account the very real possibility that, as Serbia approaches the European Union and harmonizes with the community law of that community, in the near future certain tax benefits reserved for citizens of the Republic of Serbia will have to be 'lost', such as, for example, VAT refund for the buyer of the first apartment. European tax rules do not allow discrimination on the basis of citizenship, so Serbia will either have to extend that rule to all first-time home buyers, both its citizens and foreigners, which is hard to imagine and extremely unrealistic, or to abolish it completely. . Bearing that in mind, the need for urgent socially responsible steps in public finances regarding property taxation is only further emphasized," concludes tax lawyer Minja Đokić.
Source: biznis.rs
