When is it necessary to calculate depreciation of a land plot, and when not - accounting and tax accounting of land

Situation: an organization bought a building and rights to the land plot on which the property is located for 120 million rubles. However, the purchase and sale agreement does not separate the prices for the building and the plot. The cadastral value of the land is 30 million rubles. The cadastral value of the property is 50 million rubles.

How to determine the actual cost of land and building? What is the procedure for accounting for expenses incurred by an organization in accounting and tax accounting?

Let us note that the building and land plot are objects of real estate (Clause 1 of Article 130 of the Civil Code of the Russian Federation).

Land depreciation: general procedure

The most popular question among enterprises that have purchased a plot of land as their own is: do we need to take into account the wear and tear of the land? Tax legislation (Tax Code of the Russian Federation, clause 2, article 256) gives a clear and unambiguous answer to this question: in tax accounting, depreciation is not calculated on the cost of land, and depreciation on the site is not reflected. That is, the company that owns the land cannot reduce the basis for calculating income tax due to depreciation of the land.

The legislation substantiates its position as follows: land refers to environmental management objects (along with water and forest resources, subsoil, etc.), which, in turn, do not lose their properties over time. That is, in general, the consumer value of land is constant and unchanging. The position can be confirmed by the following example: a company that has purchased land for construction can use the site to locate a property for an unlimited amount of time (both after 20 and 50 years a building or other structure can be placed on the land).

Since the useful life of the land from a consumer point of view is not limited, there is no need to charge depreciation on the site. It turns out that in this case the land does not “wear out”, and its book value changes over time only due to improvements and revaluations.

As for accounting, in this case the provisions of PBU completely coincide with tax legislation. The position on non-accrual of depreciation on land in accounting is confirmed by PBU 6/01.

Accounting and tax accounting of land plots

With the Unified Agricultural Tax for tax purposes, only those expenses that are listed in paragraph 2 of Article 346.5 of the Tax Code of the Russian Federation can be taken into account. This also includes the costs of acquiring property rights to land plots, including the costs of acquiring the right to conclude a land lease agreement. Expenses for the acquisition of a land plot are recognized evenly over a period determined by the organization, but not less than seven years. Amounts of expenses are reflected on the last day of the reporting (tax) period (subclause 31, clause 2, clause 4.1, article 346.5 of the Tax Code of the Russian Federation). The same explanations are given in the letter of the Ministry of Finance of Russia dated July 16, 2008 No. 03-11-04/1/14.

Leased land: postings

If a company leases a site, then depreciation on it also does not need to be charged. The value of land received for temporary use should be reflected on the balance sheet. Depreciation must be charged only on fixed assets located on the leased site.

Example.

In April 2021, Focus JSC rented a plot of municipal property for the purpose of constructing a warehouse for its own use:

• book value of the plot – 1,050,704 rubles;
• the cost of the right to conclude an agreement with the municipality is 3,990,407 rubles. (paid in April 2017);
• The amount of state duty for registering a land lease agreement is 14,000 rubles. (paid in April 2017);
• start of construction of the warehouse - May 2021, commissioning of the facility - February 2021;
• useful life of the warehouse is 25 years;
• the period for writing off expenses for concluding an agreement with the municipality is 4 years;
• documents for state registration are dated 05/18/2017.

The following entries are reflected in the Focus accounting:

Until the premises are put into operation, the Focus accountant records monthly expenses for the right to enter into an agreement:

RUR 3,990,407 / 4 years / 12 months = 83.133 rub.

After putting the premises into operation, these expenses are reflected in tax accounting in order to reduce taxable profit.

Accounting and tax accounting of land acquisition transactions

Instructions for the application of the Chart of Accounts for the accounting of financial and economic activities of organizations, approved by Order of the Ministry of Finance of the Russian Federation dated October 31, 2000 No. 94n “On approval of the Chart of Accounts for the accounting of financial and economic activities of organizations and instructions for its application”, to summarize information about the costs of the organization for objects that will subsequently be accepted for accounting as fixed assets, account 08 “Investments in non-current assets” is assigned, subaccount 08-1 “Acquisition of land plots” until the organization registers ownership of the land plot in the Unified State registry

Land for a quarry or landfill

In certain cases, the company can still charge depreciation on the land and thus reduce taxable profit. According to the law, land depreciation is charged if it is established that the consumer properties of the site have changed over time. Here are the most common options for this situation:

1. The land is used as a quarry for mining. If a site is acquired for the purpose of mining, its cost must be depreciated in the general manner. The quarries belong to the 7th OS group with a useful life of 15 to 20 years.
2. The site is used to accommodate a waste dump. If land is acquired for use as a municipal waste dump, the site has a limited useful life and is therefore subject to depreciation as required.

In each of the listed cases, the useful life of the site is established by internal regulations (accounting policies). The amount of monthly deductions is determined based on the period of use. The accounting records the monthly posting Dt 02 Kt 01.

Is the land plot an object of fixed assets?

First of all, we will find out whether the land plot is an object of fixed assets for profit tax purposes. According to para. 1 clause 1 art. 257 of the Tax Code of the Russian Federation, fixed assets are understood as part of the property used as means of labor for the production and sale of goods (performance of work, provision of services) or for the management of an organization, with an initial cost of more than 40,000 rubles. Moreover, from the title of this article it follows that it establishes the procedure for determining the value of depreciable property . From this we can conclude that fixed assets are depreciable property. But does this apply to all fixed assets?

Is it possible to cushion asphalt pavement?

According to the position of the fiscal service, asphalt pavement refers to external improvement objects, which are recognized as non-depreciable property, and, therefore, there is no need to charge depreciation on such objects. The rationale for this position is as follows: asphalt pavement does not have the characteristics of a fixed asset - the object is not related to production activities and does not relate to a specific building and structure. Since the main purpose of the object is to create a convenient space on or near the territory of the organization, it cannot be recognized as an object of fixed assets and is not subject to depreciation. The position of the fiscal service is confirmed by letters of explanation (No. 03-03-06/1/63 dated 01/30/08, No. 03-03-04/1/487 dated 05/30/06).

At the same time, in judicial practice there are cases where the fact of charging depreciation on the cost of asphalt pavement is recognized as legitimate. Court decisions give grounds to consider it possible to charge wear and tear on asphalt pavement in the following cases:

1. The construction of a road is inextricably linked with the creation of a fixed asset. The most common situation is that the contractor, as part of the contract for the construction of a building, has undertaken obligations to develop the adjacent territory (in this case, paving the road). Another example is that asphalt pavement is an integral part of the overall design of a construction site.
2. The asphalt pavement was created without attracting targeted funding; its creation complies with legal requirements. For example, according to technical safety requirements, an asphalt site is required on the production site of an enterprise. In this case, the asphalt pavement is recognized as an asset and is depreciated in the general manner.

It should be noted that the arguments in favor of charging depreciation for asphalt sites are quite ambiguous and are based solely on judicial practice. Therefore, be prepared for the fact that you will also have to defend this position in court.

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