Inseparable improvements are ... Rental and maintenance of premises

The Civil Code of the Russian Federation within the framework of leasing legal relationships allows the work of the tenant to make any property of inseparable improvements in respect of the leased object. The implementation of such actions presupposes the formation of various legal consequences. In connection with inseparable improvements of the leased object, individual rights and obligations may arise both with the owner and with the lessee of the relevant property. Their specificity can be determined by the type of ownership, as well as the terms of the contract between the owner and the lessee. What are the main norms of the law governing legal relations, the subject of which is the product of inseparable improvements in the property being leased? What are the nuances of taxing the results of such modernization of facilities?

Essence of inseparable improvements to the leased object

A person or organization that has leased from someone else's property - most often in this context it is a question of real estate - can somehow modernize, reconstruct, improve its functionality.

Carrying out these works may involve the formation of fundamentally new properties in the corresponding object. Reverse actions in its relation are difficult and can lead to the impossibility of using the structure. Therefore, the corresponding improvement of property is recognized as inseparable. A significant criterion for the inseparability of property is a change in the quality characteristics of the source object, as a result of which its value may increase, due to a possible increase in its useful life or consumer properties.

How can inseparable improvements look like? A sample of this modernization can be presented in a variety of ways. So, it can reflect the fact that the building has acquired significantly different characteristics in comparison with the initial state.

Inseparable improvements in the contract

It is worth noting that the procedure for leasing legal relations allows the subject who rented the property to make its appropriate modernization only upon agreement with the owner. Preferably written, fixed in the contract. Inseparable improvements are legally significant actions, and their implementation should be formalized.

In the contract between the owner of the property and his lessor, an item can be prescribed about the possible compensation by the owner of the corresponding modernization of the facility. In this case, the main parameters of improvements and their provisional value can be fixed. If the tenant has made inseparable improvements in the property structure without the consent of the owner, then he will not have any rights to the result of the corresponding modernization. All possible preferences from object optimization can be used only by its owner.

The essence of separable improvements

What is the difference between separable and inseparable improvements in principle? Here everything is very simple. Above we noted that the main criterion of inseparability is the loss of the functionality of the object in the event of an attempt to return it to its original state. Inseparable improvements are, it can be said, an irreversible process.

In turn, a detachable upgrade of an object can assume a relatively accessible return to its original state. Another nuance of the corresponding improvements - they can be initiated by the tenant without the consent of the owner. In general, all rights to use separable resources remain with the tenant - unless otherwise provided by the contract. If the tenant has made inseparable improvements to the facility, then it is necessary to analyze them for similarity to the results of actions aimed at maintaining the property in a functional state through repair and maintenance.

Of course, in most variants the difference in this case can be obvious. But if the tenant carried out a major overhaul of the property, as a result of which the property significantly changed its appearance, then, nevertheless, the result of its work is most likely not to be recognized as an improvement in the object. Theoretically, the cost of repairs can be higher than the corresponding modernization of the property. But this is of no fundamental importance.

Thus, inseparable improvements in leased property are characterized by the fact that:

- they need to be coordinated with the owner of the property;

- in general they become the property of the owner of the property and are not compensable.

In turn, a detached modernization can be made by the tenant without agreement with the owner of the property. It forms the resources owned by the tenant. However, a person or organization that removes housing may, under their responsibility, still implement inseparable improvements to the leased property. We will study what legal consequences this can lead to.

Uncoordinated inseparable improvements: legal implications

If the tenant has made inseparable improvements to rented housing without agreeing this action with the owner, then, as we noted above, he will not have the right to demand compensation from the owner. Moreover, if the corresponding modernization has led to a deterioration in the state of real estate, even if the subjective view of the owner, then the lessee is obliged to bring the object to its original state.

Agreed inseparable improvements

The second scenario - when the modernization of real estate is consistent between its tenant and the owner. In this case, the conditions for implementing the corresponding improvements, as we noted above, should be prescribed in the contract. One of the terms of the contract may be compensation for the cost of modernization by the lessor. Depending on the specific moment of improvement, the owner can pay the costs of the tenant at the expiration of the contract or in the period of its validity. The contract can also be used to determine the reduction of the rent - in compensation for the inseparable modernization.

Inseparable improvements: taxation

Let's consider such aspect, as the tax account of inseparable improvements. We agree that the tenant and the owner of the property agreed on this procedure. First of all, it is worth paying attention to the fact that improvements that are agreed between the tenant and the owner of the facility do not always refer to depreciable property, but only if they are paid for by the owner of the property.

In turn, the reimbursement of the costs of the lessee for appropriate modernization can be taken into account by the owner of the object for the purposes of income taxation. The tenant himself can also use the expenses incurred in order to optimize the amount of taxes - in a certain reporting period.

The option is possible, in which compensation for inseparable improvements by the owner of real estate is not prescribed in the contract, despite the fact that the owner has agreed to appropriate modernization. In this case, depreciation is also not charged, and the initial value of the property is not increased. There are also no grounds for optimizing the tax base.

It can be noted that in cases where inseparable upgrades have not been compensated by the lessor, the lessee is entitled to accrue depreciation on the property. Specifics of taxation of the results of modernization of facilities, we can consider the example of the parties performing legal relations obligations to pay property tax.

If the contract is concluded by the legal entity, that is, non-residential premises are leased, then they must pay the corresponding amounts to the budget. The property tax in this case should be paid by the party that fixes the costs of improving the objects on the accounting accounts. As a rule, this correlates with the ownership right to improvements. If the tenant owns them, then taxes are obligated to pay.

If the owner of the improvements is the lessor, then he fulfills the corresponding obligations upon the termination of the lease contract. But while this contract is in effect, the tenant carries out calculations with the budget. Another criterion by which the subject of payment of the property tax is determined is the accounting of the corresponding resource on the balance sheet. What does it mean? If improvements are on the tenant's balance sheet, he pays the appropriate tax. If their account is maintained by the lessor, payments to the budget must be made by him.

Property improvements and VAT

There are a number of nuances that characterize the VAT charge in the framework of legal relations, the subject of which is the rental of property, accompanied by a product of inseparable improvements in it. Let's study them. If inseparable improvements were transferred to the lessor, while they were carried out by the contractor organization - this transfer should be recognized as an implementation. For it must be paid VAT. It is presented by the contractor firm to the lessee, and a deduction can be applied to it. It can be noted that when calculating the profit tax, the object improvements transferred to the owner are not taken into account.

Involvement of a third-party organization for the purpose of modernization is the key criterion for the company's obligation to calculate VAT on inseparable improvements. The fact is that if the tenant has reconstructed the object on his own - then in this case other rules of law come into effect. In accordance with them, VAT on improvements can not be accrued.

This is due to the fact that for the qualification of improvements as part of the removable property in order to impose VAT, the transfer of ownership is required. In accordance with the norms of the Civil Code of the Russian Federation, regulating legal relations, within which there are inseparable improvements, by default, the relevant legal mechanisms are not applied. The Civil Code of the Russian Federation does not actually include provisions that imply that the tenant has ownership rights to the results of modernization of the facilities. They can not be considered as an independent asset separate from the main real estate object. Thus, when the rented premises are returned to the owner, transfer of ownership is not carried out. It turns out that the inseparable improvements made by the renter are not subject to VAT.

Accounting for Separable Improvements

It will be useful to consider the basic nuances of tax accounting, in turn, separable improvements in real estate. In order to correctly calculate the tax on them, it is first of all necessary to determine the cost and duration of the operation of the corresponding improvements. If the cost of modernizing the real estate does not exceed the value established by the Tax Code of the Russian Federation, and the period of their use is less than 12 months, then the improvements are to be attributed to the material and production reserves. If the relevant costs are higher than the criterion established in the RF Tax Code, and the period of use is more than 12 months, the value of the property must be written off through depreciation.

If the subject of legal relations of rent is a legal entity, it is likely that the accounting policy will be approved at the level of its local acts. And if in it the limit of assigning property to the depreciable one is set lower than in the Tax Code of the Russian Federation, then in order to take into account separable improvements, it is necessary to use exactly that indicator that is approved in the local act. It can be noted that the property tax is not paid if the relevant modernization is carried out. This is due to the fact that separable improvements in the general case are classified as movable property.

How to register the owner's consent to inseparable improvements in the contract?

Having studied how the accounting of inseparable and separable improvements is carried out, we will consider such aspect as the correct registration of the consent of the owner of the property for the appropriate modernization of the object. To do this, a separate agreement must be signed between the tenant and the property owner. It can complement the one in accordance with which the lease of non-residential premises or, conversely, those relating to the apartment fund is carried out. This contract should specify the conditions: what works are expected to be done to improve the facility, who will pay for the modernization, in whole or in part, how the cost of improving the real estate is supposed to be recovered.

Compensation of the lessee's expenses for modernization can be carried out, as we noted above in the article, by reducing rent. Or the sale of inseparable improvements is possible. Everything is determined by the parties to the contract. Its correct composition is an important aspect of legal relations. If either party fails to do so, the second party will be entitled to receive their preferences in court. For example, a tenant may recover an inseparable improvement in an equivalent amount if the owner does not pay the cost of the relevant modernization, although he undertakes to do so under the contract.

The absence of a written agreement between the tenant and the owner means that neither side can use expenditures for tax purposes. In addition, as we noted above in the article, inseparable improvements the lessor has the right to demand to remove from the object - but so that its functional state is not affected. The disputes between the owner of the property and his tenant can be resolved in court.

Rent of the enterprise and its inseparable improvements: nuances

At the beginning of the article, we determined that in general, inseparable improvements are a characteristic of real estate. But it is not always the case. It happens that inseparable improvements are the property of objects that are not necessarily real estate. For example, it could be an enterprise. In this case, the legal relations associated with his lease are regulated by other rules of law than in the case of real estate.

So, if the tenant has made improvements to the structure of the enterprise, then, in accordance with the legislation of the Russian Federation, he gets the right to reimburse his own expenses for the corresponding modernization, even if he did not agree with the lessor on the implementation of these actions. Unless, of course, another is established by a contract between the owner of the enterprise and his partner.

However, the lessor can avoid the obligation to compensate the lessee for the costs of judicial improvements. To do this, he will need to prove that the inseparable improvements of the leased property have not modernized it so clearly that the operating capacity of the production assets of the enterprise has grown insufficient in terms of the need to compensate the lessee's costs. In addition, if the owner of the firm can try to prove in court that the tenant did not have an objective need for modernization.

Improvements in the sale of residential property

What legal consequences can characterize inseparable improvements when selling an apartment of one individual to another?

In this case, it will be useful to turn to the analysis of the same provisions of law that regulate legal relations, the subject of which are transactions with any real estate. That is, in principle, those that we considered in the context of corporate interaction of various businesses in transactions with non-residential real estate. In this case, the legal nature of the relevant legal relations is the same and is governed by the same rules of law.

Separable improvements in a rented apartment are in general the property of the lessee, unless other conditions are stipulated in the contract between him and the owner of the apartment. In the event that the tenant made inseparable improvements on the leased object with the consent of the apartment owner, then upon termination of the rental contract, he gets the right to receive compensation for his expenses for the appropriate modernization. Again - if the transfer of inseparable improvements is not carried out otherwise due to certain provisions of the contract between the tenant and the owner.

If the modernization of the facility has not been agreed upon between the owner and the tenant, in general the expenses incurred by the second are not compensable. But when selling the apartment owner can include them at will in the cost of the object.

If the improvements in the property are made at the expense of depreciation charges due to it, then the right of ownership to them is assigned to the lessor. This rule is relevant for legal relations with the participation of legal entities, the subject of which is renting an apartment.

Thus, with respect to inseparable improvements, different rules of law may apply - for example, if you compare rent of housing and enterprises. In addition, they can have nuances in terms of interpretation. Participants of lease legal relations should timely monitor the appearance of new norms in the Civil Code of the Russian Federation, as well as their interpretation in various departmental legal acts and documents.