On 22 April 2026 the Constitutional Court of the Russian Federation adopted Judgement No. 26-П in accordance with Article 47.1 of the Federal Constitutional Law «On the Constitutional Court of the Russian Federation». The case on the review of constitutionality of Article 217.1 (paragraph 2 of item 2) of the Tax Code of the Russian Federation was considered in connection with the complaint of citizen A.D.Dogar.Background
Alexandra Dogar lived in an apartment in the town of Labytnangi in the Yamalo-Nenets autonomous okrug since 2012. In 2017, the local self‑government body decided to develop the area, as a result of which the land plot with the building containing the applicant’s apartment was expropriated for municipal needs. The applicant was provided with equivalent housing in the same locality. However, in 2021 she decided to sell the real estate.
The tax authority assessed additional personal income tax (PIT) on the sale of the property, since she had owned the property for less than five years from the date of its acquisition in 2017, and also imposed a fine.
The city court dismissed the applicant’s claim, but the appellate court reversed this decision and combined the periods of ownership of both apartments. The court applied by analogy the contested provision, under which, upon the sale of residential premises or a share therein provided in exchange for vacated premises in connection with the renovation programme in Moscow, the minimum ownership period for the sold residential premises includes the period during which the vacated premises were owned. However, the cassation and higher courts held that such preferential rules apply only to the renovation program in Moscow.
Position of the Court
The five year (in some cases three year) ownership period for real estate established by the Tax Code for exemption from PIT upon its sale serves as a conditional indicator that the apartment was not acquired for further resale in order to obtain quick income.
Although the inclusion of an apartment building in a renovation programme requires the consent of two thirds of its residents, the buyout of a citizen’s premises against his will is not excluded, which requires strict compliance with constitutional guarantees. In particular, the provision of new housing is envisaged, but it may not fully meet the individual needs of the citizen, which may create a legitimate interest in selling it.
The contested provision was introduced into tax regulation to protect the legitimate expectations of citizens and to provide the fullest possible compensation for possible losses arising in connection with the implementation of the renovation programme. Moreover, the benefit is established not on a territorial basis (residence in Moscow), but precisely in connection with participation in a special urban development programme implemented by decision of the federal legislator. This does not exceed the limits of legislative discretion and, as such, does not contradict the Constitution.
However, the renovation programme does not exhaust the grounds for the compulsory expropriation of a citizen’s housing for constitutionally significant purposes. The expropriation of land plots and buildings located thereon for state or municipal needs is permitted. In the implementation of integrated development of residential areas under the Town Planning Code, the owner is also required to conclude, in accordance with civil law, a mandatory agreement for the transfer of ownership of the residential premises with the provision of appropriate guarantees. Prior to the establishment of such regulation in the Town Planning Code, constituent entities of the Russian Federation and municipalities adopted their own housing renovation programmes, and there was regulation providing for the relocation and demolition of apartment buildings, including those not recognised as dilapidated and subject to demolition or reconstruction, with the provision of new apartments to their residents. Thus, in the applicant’s case, this was formalised as expropriation for municipal needs.
In such cases, as with renovation, ownership of housing may be terminated against the citizen’s will. Under these circumstances, the ownership period established by the Tax Code, which exempts from PIT upon the sale of an apartment, loses its significance as a conditional indicator for exempting income from the sale of real estate from taxation. Due to constitutional guarantees, citizens are entitled to compensation for all losses incurred in the event of such an expropriation. They may be equally interested in taking into account the ownership period of the vacated housing as in the case of renovation. They similarly form justified expectations of tax exemption in connection with long term ownership of housing at the time of its alienation. Ignoring, in such cases, the ownership period of the previous housing for the purpose of PIT exemption would undermine trust in the institutions and decisions of public authority, contrary to the Constitution. This indicates the existence of a constitutionally significant gap.
The contested provision is inconsistent with the Constitution, as it does not provide for the possibility of applying a special method of calculating the minimum ownership period (including the ownership period of the vacated housing) to a residential premises (or share therein) provided into ownership in exchange for housing, the right to which was terminated by a decision of a public authority that provides for or permits the termination of ownership of a residential premises or a share therein against the citizen’s will, and which is not related to the housing renovation programme in Moscow.
The legislator should make the necessary amendments to the current legal regulation. Until then, the special procedure for calculating the minimum ownership period for the residential premises (share therein) provided for in the Article 217.1 (paragraph 2 of item 2) of the Tax Code shall also apply in cases analogous to that of the applicant, where the apartment building containing the vacated residential premises has not, in the established procedure, been recognised as dilapidated and subject to demolition or reconstruction, nor has the residential premises itself been recognised as unfit for habitation.
This Judgement shall not serve as a basis for reviewing the amount of fulfilled PIT obligations for previous periods, nor for reviewing final judicial acts in other cases, except for the applicant’s case.
Press Service of the Constitutional Court of the Russian Federation