Published 20 October 2026, Synergy Audit
Equipment on a foundation: real estate or not?
A question that often comes up in audit practice: does production equipment become real estate for property tax purposes if it is installed on a permanent foundation?
The question
The answer
The key question is what the foundation is for:
- if it serves as the base for specific process equipment, the foundation is accounted for as part of that equipment. The existence of such a foundation does not in itself make the equipment real estate;
- if, according to the design and technical documentation, the foundation is part of a building or a separate structure, it belongs to the corresponding real estate asset.
This approach is supported by the Supreme Court of the Russian Federation in Thematic Review No. 4/2026, approved by the Presidium of the Supreme Court on 29 April 2026, and was communicated by the Federal Tax Service to the tax authorities in Letter No. BS-36-21/3766@ dated 7 May 2026.
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