When permitted use is in place but construction is impossible

Case No. А40-175427/2025

Six plots in the Tsvetochny cottage settlement. The permitted use is individual housing construction and low-rise construction. There are no houses, and three years have passed.

The inspectorate applied a multiplying coefficient of 4 under paragraph 15 of Article 396 of the Tax Code, and made an additional assessment of land tax for 2023 of RUB 1.2 million.

The problem is that construction on these plots is objectively impossible.

According to the Unified State Register of Real Estate (EGRN), the land is occupied by medium-pressure and high-pressure gas pipelines, power lines, a sewer, treatment facilities and wells. The cadastral engineer's conclusions showed that the parts of the plots which are free of maintenance and protection zones cannot be separated out as independent land plots. Neither the minimum area, nor the configuration, nor the intermingled strips and inclusions allow it.

The court of appeal referred to paragraph 35 of Review of the Supreme Court No. 1 for 2021. The increased coefficient is a tax consequence for an owner who could have built but did not. If objective circumstances stand in the way of construction, the coefficient cannot be applied as a sanction.

The court of cassation agreed. As a result, the reassessment was set aside.

The conclusion for owners: if a plot is formally intended for construction, but is in fact occupied by networks or for some other reason objectively cannot be developed, permitted use alone is not enough for a tax dispute.

What worked here was the evidence: the EGRN -> the assets on the plot -> the protection zones -> the cadastral engineer's report -> the impossibility of forming land suitable for construction.

It is also telling that the court of first instance looked above all at the permitted use, and refused the taxpayer.

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