Russian citizens have the right to receive various tax deductions. Among the most demanded are payments related to the costs of acquiring real estate, as well as the payment of mortgage interest. What is the specificity of these deductions? By what mechanisms can they be obtained?
The essence of the deduction
The deduction for the purchase of an apartment is guaranteed by the provisions of the Tax Code of the Russian Federation. In accordance with Article 23 of the Tax Code of the Russian Federation, a citizen who has acquired or built real estate at the expense of personal expenses (or in a mortgage) is entitled to receive property deduction. This type of payment is formed of three main components:
- a deduction based on the cost of buying the property itself;
- payment, the calculation of which is determined by the amounts spent on repairs;
- a deduction, the basis of which is the interest paid on the mortgage (unless, of course, the apartment is bought on credit).
It can be noted that in some cases, the costs on which the deduction is calculated can include the costs of developing project documentation during construction, as well as those costs associated with the installation of communication systems. It can also be noted that a tax deduction when buying an apartment is also possible in the case of refinancing a mortgage loan - in accordance with the new conditions under an agreement with the bank.
The payments in question are referred to as a “deduction”, since they are supposed to be paid at the expense of money already paid by the citizen to the state treasury, as well as those amounts that, according to the law, will need to be paid. We are talking about income tax transfers (PIT) in the amount of 13% of the salary or other official sources of cash receipts in the personal budget of a citizen.
Thus, a person, using the deduction in question, has the right to either return the funds already paid to the state or not legally transfer them to the treasury. That is, it can be noted that there are two main mechanisms within which a deduction is possible upon purchase of an apartment: upon deductions of 13% to the treasury or during periods when, according to the law, it is planned to transfer tax to the state.
Deductions on the purchase and sale
We note an important nuance - the term “deduction” in the Russian tax legislation regarding regulation of real estate transactions can be used in different contexts, that is, not only in the case when the basis for its calculation is a purchase. Selling real estate may also involve the use of statutory deductions related, in turn, to the possibility of not paying a certain amount of tax on income received.
At the same time, it can be noted that the two types of deductions in question can in some cases be combined. Buying, selling real estate are often interconnected processes. However, in this article we are talking about deductions associated with the cost of the purchase of housing.
Deduction amount
What can be the size of payments? According to current laws, this is part of the cost of 13 percent (from the purchase of an apartment or from interest payments to the bank). We noted above that the deduction in question is represented by three main varieties. Payments made out on the basis of expenses for the purchase of a property, as well as repairs, in the amount may not exceed 260 thousand rubles. In turn, the maximum deduction on mortgage interest, which is established by applicable laws, is 390 thousand rubles.However, there is an important nuance regarding this formula.
Legislation Variability
The fact is that Russian legislation, the subject of which is the deduction for the purchase of an apartment, changes quite often, as many lawyers note. In the current edition there is a norm according to which, in particular, there is a noted limitation in the limit value of the deduction on mortgage interest. However, until 2014, it was not in the provisions of the law - those citizens who purchased the apartment in a mortgage were able to return part of the cost of paying interest without limiting the amount of the corresponding amounts. However, this pleasant opportunity for many borrowers was accompanied by far from the most desirable rule of law, according to which it was possible to receive a deduction from only one property.
That is, as soon as a person received from the treasury the full amount corresponding to 13 percent of the costs of an apartment, the state’s obligations in terms of granting deductions ended. It didn't matter how big the deduction could be when buying an apartment (share in it). The fact that its value could not reach 260 thousand rubles did not play a role. However, the legislator to some extent compensated for such a norm, as we noted above, by the absence of an upper limit on the amount of payments calculated on the basis of payments on mortgage interest.
Thus, the maximum deduction for the purchase of an apartment may depend on the period in which the citizen first applied for the appropriate payment - before 2014 or after. In the first case, he will be able to receive a maximum of 260 thousand rubles, and only if the cost of real estate allows it - for basic expenses and repair, as well as the amount paid on the basis of interest on the loan until it is repaid. In the second case, a person can also count on 260 thousand rubles, but to achieve this value is permissible due to several real estate objects, as well as to receive the maximum deduction on mortgage interest in the amount of 390 thousand rubles.
Do you need formal work?
Generally needed. At the same time, individuals can pay personal income tax in the amount of 13% not only from salaries, but also from any other income - for example, from the sale of other real estate. Many Russians do not work under the Labor Code, but within the framework of civil contracts, which also involve deductions from fees and other compensations under the agreement in the amount of 13%. Appropriate transfers may well be used to get a deduction for the purchase of an apartment.
It should be noted that individual entrepreneurs, retirees, as well as, for example, business owners who are not registered under a labor contract, cannot receive an apartment deduction, since they do not pay personal income tax. Of course, provided that they do not work under an employment contract or in the framework of civil law transactions, and also do not have revenue, from which 13% is transferred to the treasury.
The presence of work on the TC may be important from the point of view of one of the two basic scenarios for processing the deduction, which we mentioned above. We are talking about the way in which a person has the legal right not to pay personal income tax when buying an apartment for a period until the amount of the relevant payments that are not listed in the treasury reaches the limit indicators noted above. In this case, formal employment is required. We will consider this aspect in more detail a little later, when we will study the methods of processing the deduction.
When can I apply for a deduction
At what point in time after the apartment is purchased (in a mortgage or at the expense of personal funds), can a person apply to state bodies, namely the Federal Tax Service, minus? This can only be started if the citizen has documents in his hands that confirm that he is the owner of the property (in full or in shares).In general, this is a certificate of ownership. Also, the Federal Tax Service may be sufficient act of acceptance of housing, issued by the contractor.
If you receive a deduction when buying an apartment on a mortgage, then many lawyers also recommend waiting for the correct execution of all procedures related to the transfer of housing as a mortgage to a bank. Only upon their completion will the credit and financial institution be able to issue all the documents necessary for the FTS - under the scenario when the deduction is drawn up on the basis of interest payments.
But, as a rule, this stage is successfully implemented even faster than the state issues a certificate of registration of ownership. In addition, the first deduction payments are usually calculated on the basis of the base amount of expenses, and not on interest, and therefore some of the bank documents may not be needed at all. It all depends on the specific stage of interaction with the Federal Tax Service. If this is the first visit of a citizen to the department, then, as a rule, deductions begin to be paid on the basis of the cost of purchasing the apartment itself.
However, the content, as well as the timing of the first visit of a citizen to the Federal Tax Service, largely depends on which of the methods of obtaining the deduction. There are two of them, as we have already noted above. Within the framework of the first, a citizen can return 13 percent of the purchase of an apartment at the expense of the personal income tax payments paid to the treasury. The second method assumes that a person can legally not transfer income tax for a certain period. The first scenario is sometimes called self-processing of the deduction, the second - receiving payments through the employer. Consider the features of each.
Self deduction
The first option, in which a person can receive a deduction from the cost of buying a home, is an independent interaction with the Federal Tax Service. It is characterized by certain specifics in terms, a set of documents, and other nuances of communication with the department.
If we are talking about a person’s first visit to the Federal Tax Service, you can go to the tax office on any business day of the year that follows when the person registered the ownership of the apartment. A visit to the Federal Tax Service under this scenario is generally carried out once a year.
The main goal is to provide the department with documents that confirm that the person paid in the year when he bought the apartment, personal income tax - from salaries or other sources, and therefore can use the right to receive a deduction. It will be completely equal to personal income tax if it does not exceed the values indicated by us above - 13% of the cost of buying an apartment, but not more than 260 thousand rubles, as well as the amount of interest payments under the mortgage, but not more than 390 thousand rubles . if housing purchased in 2014 and later. The mortgage part of the deduction, as a rule, is paid only if the citizen received the full amount as part of the payment of expenses for the purchase of an apartment.
If for the first year a person’s income was not allowed to receive the full amount of the deduction guaranteed by law, he can receive the balance in the next few years - and again in proportion to the personal income tax paid for 12 months for the year preceding the visit to the Federal Tax Service.
Key Documents
You will need to take a fairly impressive package of documents with you. First of all it income statement in the form of 3-personal income tax. When buying an apartment, it is this document that allows you to confirm the right to a deduction, as well as determine its specific amount in the first place.
Apart from providing the 3-NDFL declaration, when buying an apartment and applying for a deduction, it is also necessary to present the FTS a contract for the sale of housing.
Another major source is a 2-personal income tax certificate from work. You will also need a copy of the TIN certificate. Of course, you will need a passport.
The most important documents are those that confirm the transfer of funds for one reason or another in favor of the seller, as part of the cost of repairs, payment of estimated documentation, etc.
One of the key documents, as we noted above, is a certificate of ownership of the apartment. Or, if it is not yet ready, an act of acceptance of a real estate object may come up - this document confirms that the apartment in the new building belongs to a particular citizen.
If the apartment was bought on a mortgage, then it will still be necessary to provide a loan agreement to the Federal Tax Service, as well as an extract stating that for such and such months a person paid interest in such and such amount.
It will be necessary to attach a statement in the official form to the package of sources that we listed above, as well as an inventory confirming that such documents are being transferred to the Federal Tax Service. You will also need bank details to which the FTS will transfer the deduction.
You can go to the tax office, as we have already noted above, on any day of the year that follows when the person bought the apartment, or the next reporting one, during which he transfers the personal income tax payments due from the salary. If the documents are in order, then the Federal Tax Service must, within 3 months, transfer the deduction to those bank details that will be provided by the citizen.
Deduction through the employer
The scenario described above assumes that the person legally returns the tax paid to the state. However, it is logical to assume: in all likelihood, within the framework of this scheme, the state carries out double work related, firstly, to receiving payments on personal income tax, and secondly, to returning it. Perhaps it’s easier not to pay income tax at all?
The legislator, interestingly, is ready to provide citizens with such an opportunity. Yes, it is possible to establish interaction with the state in such a way that the personal income tax deduction when buying an apartment will look like a legitimate opportunity not to pay the corresponding tax, thereby simplifying the work of the state to some extent.
The scheme in question is as follows. In the general case, for each monthly salary of an employee, the employer company pays 13% as personal income tax. This is what accounting does. In turn, a taxpayer who has the right to a deduction when buying an apartment has the right to ask accountants not to transfer personal income tax on legal grounds. As a result, a person will receive a salary from which the corresponding tax will not be deducted. What do I need to do?
The first thing to go to the Federal Tax Service. This can be done on any day, but provided that you have all the necessary documents on hand - a certificate of ownership, as well as sources that, as we noted above, can confirm the fact of registration of relations with the bank (if the apartment was bought in a mortgage) . The Federal Tax Service will have to give a notice to the person confirming the citizen’s right to legally not pay personal income tax until the end of the year or until the deduction reaches the maximum amounts indicated by us above.
The documents that need to be submitted to the Federal Tax Service are mostly the same as in the case of self-processing deduction. At the same time, it can be noted that a declaration confirming the payment of personal income tax is not needed. When buying an apartment and applying for a deduction through an employer, a 2-NDFL certificate is also not needed. It can be noted that the application that will need to be submitted to the Federal Tax Service will be in a slightly different format than with independent interaction with the agency.
Within 30 days, the Federal Tax Service will issue a notification. It will need to be attributed to accounting. From that moment, a person will receive a non-deductible salary under the personal income tax until the end of the year or until the amount of deduction guaranteed by law when buying an apartment is exhausted. Next year, the procedure for communication with the Federal Tax Service will need to be repeated. An important nuance - if a person quits, then payments, of course, will be stopped. To get them again, you need to get a job, and then repeat the described scenario of interaction with the Federal Tax Service and accounting. Similarly, if a person transferred to another company.
Which way to choose?
Which of the above deduction methods may be preferable? First of all, it should be noted that a combined option is possible in which both scenarios are involved. This is possible if, for example, a person bought an apartment in September. In this case, he will be able, for example, to immediately go to the Federal Tax Service in order to use the opportunity not to transfer taxes before the end of the year from salaries, that is, to use the second scenario. At the same time, at the beginning of next year, he can go to the Federal Tax Service and receive a deduction from the personal income tax paid to the treasury for the months of the previous year that preceded the purchase of an apartment.
However, it is possible to use each of the scenarios in their pure form. The citizen himself decides what is more convenient for him. For example, someone does not want to waste time collecting a larger set of documents for the first option - as we recall, there needs a 2-NDFL certificate, as well as a declaration confirming income. When buying an apartment, many Russians, in turn, want to quickly begin to receive a deduction due to the fact that, for example, they have to pay a mortgage and want to reduce costs. Although it is more convenient for many citizens to receive a lump sum for the whole year in order to, for example, subsequently repay part of the loan ahead of schedule - it does not always work to accumulate a similar amount of money with monthly receipts.
