Obtaining a property tax deduction: what has changed in 2021

The right to a tax deduction appears in the case when you have carried out certain transactions with property (Article 220 of the Tax Code of the Russian Federation). It could be:

• buying a home - a house, apartment, room, etc.;
• sale of property;
• construction of housing or acquisition of land for these purposes.

To receive a tax deduction, you will need either a registration certificate and a purchase and sale agreement, or a transfer and acceptance certificate and a share participation agreement.

In this article we will look at the situation with purchasing an apartment.

• Who can receive a property tax deduction
• What documents are needed to receive a deduction?
• Amount of deduction and maximum expenses
• How to calculate the amount of deduction
• What is taken into account as expenses when calculating deductions
• Stages of obtaining a property tax deduction
• Obtaining a property tax deduction through an employer
• In 2021, it will be possible to receive a tax deduction without a declaration

Who can receive a property tax deduction

Firstly, only citizens of the Russian Federation who purchased an apartment in Russia can count on the benefit. It is important that you pay your own money for the housing or take out a mortgage.

Secondly, the deduction is provided to those taxpayers who have taxable income at a rate of 13%. To do this, you need to receive an official salary and pay personal income tax on it.

For example, if an individual entrepreneur uses a simplified taxation system, then he will not be able to receive a tax deduction, since “simplified” ones are exempt from paying personal income tax. On the same basis, self-employed people (payers of professional income tax) are deprived of this benefit.

However, both individual entrepreneurs using the simplified tax system and self-employed people can receive additional income subject to personal income tax. For example, they can earn money from their own activities and at the same time work officially in the company. In this case, they will have the right to receive a property tax deduction in the tax period in which income taxed at a rate of 13% was received.

If a taxpayer bought an apartment in 2021 and received a registration certificate in 2020, then starting from 2020 he has the right to a deduction. Therefore, as soon as you have received documents confirming your rights to real estate, begin collecting the necessary papers to receive a property tax deduction.

What is a tax deduction and why do you get it?

A tax deduction is a certain amount of income that is not subject to tax, or a refund of part of the personal income tax (PIT) already paid in connection with some expenses incurred. The types of these expenses are determined by the Tax Code of the Russian Federation. Any citizen of the Russian Federation or a foreign citizen can receive a tax deduction if he lives in Russia for more than 183 days a year and pays tax on the income received.

Example!

Let's say you earned 1 million rubles in a year. and 13% was paid in income taxes. In the same year, you spent 100 thousand on your child’s education at the university. These 100 thousand are deducted from income, and it turns out that you had to pay tax not 130 thousand, but 13% of 900 thousand, that is, 117 thousand. The overpayment amounted to 13 thousand rubles - so they will return it to you.

What documents are needed to receive a deduction?

This kit includes:

• passport;
• income certificate in form 2-NDFL, which indicates income and taxes paid for the corresponding year;
• Declaration 3-NDFL, from which it is clear that property was acquired, taxes were paid and that a certain amount of property tax deduction is due.

For the apartment you will need:

• apartment purchase agreement;
• an act on the transfer of an apartment to the taxpayer or a certificate of state registration of the right to an apartment.

If the apartment was purchased through a shared participation agreement:

• an agreement on shared participation in construction or an agreement on the assignment of the right to claim;
• an acceptance certificate or other document confirming the transfer of the object from the developer to the participant;
• copies of payment documents (for example, payment orders, bank statements about the transfer of money from the buyer’s account to the seller’s account).

If the apartment was purchased on the secondary market:

• agreement on the purchase of an apartment (for example, a purchase and sale agreement);
• copies of payment documents (for example, payment orders, bank statements about the transfer of money from the buyer’s account to the seller’s account);
• documents confirming ownership of the apartment (for example, a certificate of state registration of rights).

If you bought a house and land:

• agreement for the purchase of a land plot with a residential building;
• copies of payment documents (for example, payment orders, bank statements about the transfer of money from the buyer’s account to the seller’s account);
• documents confirming ownership of a residential building (for example, a certificate of state registration of title);
• documents confirming ownership of a land plot (for example, a certificate of state registration of rights).

Until 2014, property tax deductions were issued for only one property, but now it can be received from several apartments. The limit on the amount remains the same - no more than 2 million rubles. For example, if an apartment costs 1.5 million rubles, then you can get a deduction of another 500,000 rubles. from the next apartment.

Until 2014, there were no restrictions on mortgage interest. For example, from an overpayment of 10 million rubles. it was possible to get a deduction for the entire 10 million rubles. Starting from 2014, a limit was introduced on the deduction of mortgage interest in the amount of 3 million rubles.

Tax deductions can be obtained not only for real estate, but also for mortgage interest.

For this you need the following documents:

• loan agreement with annexes and additional agreements thereto;
• documents confirming payment of interest on the mortgage (for example, a certificate from the bank).

The deduction is issued for the interest actually paid. For example, if a mortgage agreement was signed for 10 years 3 years ago, then a tax deduction is issued for the amount of interest paid for 3 years. Interest paid in the following year will be tax deductible in the following year.

Deduction for training: documents, procedure

The standard package for applying for a tax deduction for education includes:

• Copy of Russian passport;
• Tax return in form 3-NDFL;
• A certificate of income for all places of work in the reporting year where the employer paid income tax for you (form 2-NDFL) is issued by the accounting department of the organization where you worked;
• A copy of the agreement with the educational institution addressed to the payer;
• A copy of the license of the educational organization, certified by its seal (if there is information about the license in the contract, this copy does not need to be attached);
• Copies of receipts, checks or other payments confirming payment for educational services;
• An application to the Federal Tax Service with a request to return the tax amount and details where it should be transferred.

Procedure:

1. Fill out a tax return (form 3-NDFL) at the end of the year in which tuition was paid.
2. Obtain a certificate from the accounting department at your place of work about the amounts of accrued and withheld taxes for the year in form 2-NDFL.
3. Prepare a copy of the agreement with the educational institution for the provision of educational services, which specifies the details of the license to carry out educational activities. If the cost of training increases, a copy of the document confirming the increase in cost, for example, an additional agreement to the contract.
4. Prepare copies of payment receipts confirming funds paid for training (cash register receipts, cash receipt orders, payment orders).
5. Submit a completed tax return with copies of all collected papers to the tax authority at your place of residence.

Important!

The deduction is due only when paying for full-time education. You will be able to reimburse expenses for your education, the education of your children, including those under your care, as well as brothers and sisters. But for grandchildren, nephews, spouses - it’s impossible.

Evgeny Kozichev

Amount of deduction and maximum expenses

There are some nuances with the registration of deductions depending on the type of property.

• Sole proprietorship . When buying an apartment, you can return the property tax deduction, but not more than 2 million rubles. 13% of the cost is refundable. By purchasing an apartment for 2 million rubles, you can return 260,000 rubles. previously paid taxes, and for 1 million rubles. — 130,000 rub. If the purchase price is more expensive, the refund amount will not change.
• Common shared ownership . For example, when purchasing ½ share in an apartment for 3 million rubles. You can apply for a deduction of no more than 1.5 million rubles.
• Common joint property . Until 2014, spouses for two could receive a deduction of no more than 2 million rubles. Therefore, it was more profitable to issue a deduction for only one of the spouses, and the other could receive another tax deduction in the future. Since 2014, the limit is 2 million rubles. are established not per property, but per person. For example, if the cost of an apartment is 5 million rubles, then each spouse can receive a deduction of 2 million. If the apartment costs 3 million rubles, you can agree to make a deduction of 1.5 million rubles, and then each 500,000 rubles remain, which can be used for the following objects.

How to calculate the amount of deduction

The maximum deduction amount is: 2,000,000 x 13% = 260,000 rubles. This amount can be applied to several purchased residential properties if their total cost is less than 2 million rubles. (clause 3 of article 220 of the Tax Code of the Russian Federation).

If real estate is purchased by spouses, then each of them has the right to a maximum deduction amount of 2 million rubles.

If a loan was taken out to purchase property, you can receive a deduction of no more than 3 million rubles for interest. The maximum deduction amount is: 3,000,000 x 13% = 390,000 rubles.

What is taken into account as expenses when calculating deductions

If you purchase an apartment, then the costs take into account:

• the purchase of real estate itself;
• acquisition of rights to an apartment in a building under construction;
• spending on finishing materials;
• apartment finishing work, development of design and estimate documentation.

If you buy a house or build one, then the costs include:

• development of design and estimate documentation;
• purchase of building materials, as well as finishing materials;
• the purchase of a house itself, including at the stage of unfinished construction;
• house construction and finishing work;
• carrying out electricity, water and gas supply and sewerage.

Stages of obtaining a property tax deduction

So far the process consists of four stages. But most likely, already in 2021, a bill will be adopted that will amend the Tax Code in terms of introducing a simplified procedure for obtaining tax deductions for personal income tax. The deadline for submitting amendments is February 24, 2021.

Step 1. Collect copies of all necessary documents

Copies of documents confirming the right to housing:

• when constructing or purchasing a residential building - a certificate of state registration of the right to a residential building or an extract from the Unified State Register;
• when purchasing an apartment - a purchase and sale agreement, an act of transfer of the apartment to the taxpayer, a certificate of state registration of ownership or an extract from the Unified State Register of Real Estate;
• when purchasing a land plot for construction or ready-made housing - a certificate of state registration of ownership of the land plot and a certificate of state registration of ownership of a residential building;
• when paying off interest on a mortgage - a mortgage agreement, a schedule for repaying the loan and paying interest on the use of borrowed funds.

Until 2021, to receive a deduction, it was enough to provide a certificate of state registration of the right. But in 2021, there were changes in confirming the right to a property deduction when purchasing real estate (Federal Law dated July 3, 2016 No. 360-FZ). If you purchased real estate after July 15, 2021, then the right to a property deduction will have to be confirmed with an extract from the Unified State Register.

Copies of payment documents:

• confirming expenses for the acquisition of property (receipts for receipt orders, bank statements about the transfer of funds);
• evidence of payment of interest under the mortgage agreement (certificate of interest paid for using the loan).

Stage 2. Take certificate 2-NDFL from work

Just contact the accounting department - they will prepare it.

Step 3. Fill out the 3-NDFL declaration

You will need data from your passport, 2-NDFL and other documents.

Please note that Form 3-NDFL is updated annually, but you must use the one that corresponds to the year for which the personal income tax is being returned.

On its website, the Federal Tax Service provides an example of filling out a tax return in Form 3-NDFL.

If the property was purchased as a common joint property, you must provide:

• a copy of the marriage certificate;
• a written statement on the agreement of the spouses on the distribution of the amount of property tax deduction.

Please note: the new form 3-NDFL includes a statement for a refund of the amount of overpaid tax. It also needs to be filled out so that the tax office can transfer the amount to you.

Until 2021, the application had to be filled out separately using a special approved form (Order of the Federal Tax Service of the Russian Federation dated February 14, 2017 No. ММВ-7-8 / [email protected] ).

In your application please indicate:

• Name of the bank;
• bank account details to which the amount must be transferred (the amount in the application must match the amount indicated in the declaration).

Step 4. Submit a set of documents to the tax office

The package of documents is submitted either to the tax office at your place of residence in person, or through your personal account on the Federal Tax Service website. Specialists check documents within 3 months. If any questions arise, you will be contacted and asked for original documents. If everything is in order, the money will be credited to your account. In general, the procedure for obtaining a property tax deduction takes a maximum of 4 months.

Obtaining a property tax deduction through an employer

If you contact your employer, you can receive a property tax deduction before the end of the tax period. In this case, filing a 3-NDFL declaration is not required.

What do you need:

• Write an application (in any form) to receive a notification from the tax authority about the right to a property deduction. You can use the form that the Federal Tax Service recommends in Letter dated October 6, 2016 N BS-4-11 / [email protected] But it is much easier to submit an application through the taxpayer’s personal account, since there is already a special form there.
• Make copies of documents confirming your right to receive a deduction. Upload them to the taxpayer’s personal account and sign with an electronic signature (there is no need to specially obtain it, it is generated automatically).
• Submit to the tax authority an application to receive notification of the right to a property deduction, attaching copies of documents confirming this right.
• After 30 days, receive a notice of the right to deduction from the tax authority and give it to your employer.
• Provide a notice issued by the tax authority to the employer, which will be the basis for not withholding personal income tax from the amount of income paid to an individual until the end of the year.

A notification from the Federal Tax Service is the basis not to withhold personal income tax from the salary paid to an employee in the current tax period, and the main document confirming the right to deduction, therefore, upon receiving the notification, you must check whether all your data and details are correct.
Yulia Rybalko Leading payroll specialist in legal

note

• There is no statute of limitations for obtaining a property tax deduction. For example, you can receive a tax deduction even 10 years after purchasing an apartment.
• If you file a deduction yourself, then at the tax office, after the end of the tax period, you can count on a one-time full amount of 13% of your income earned during the year. If the deduction is issued through the employer, then the personal income tax refund will occur before the end of the tax period if the tax office confirms the right to the deduction. This will allow you to receive your salary without personal income tax withholding, starting from the month in which you received the notice from the tax office.
• According to paragraph 9 of Art. 220 of the Tax Code of the Russian Federation, if property tax deductions cannot be used in full during a tax period, their balance can be transferred to subsequent tax periods until they are fully used. Depending on the taxpayer’s earnings, personal income tax refunds may take several years.

Child deduction: documents, procedure

To receive a “children’s” deduction, it is not necessary to go to the tax office. It is enough to contact the accounting department at your place of work with a corresponding application. The simple procedure makes this deduction the most popular among the population. Usually the employer is asked to apply for this deduction from the beginning of the year, but you can also claim it retroactively through the Federal Tax Service.

The deduction for a child (children) is provided up to the month in which the taxpayer’s income, taxed at a rate of 13% and calculated on an accrual basis from the beginning of the year, exceeded 350 thousand rubles. The deduction is canceled from the month when the employee’s income exceeds this amount.

For the first and second child, a deduction of 1,400 rubles is allowed; for the third and each subsequent child - 3,000 rubles. For each disabled child under 18 years of age, or a full-time student, graduate student, resident, intern, student under the age of 24, if he is a disabled person of group I or II - 12,000 rubles. parents and adoptive parents (RUB 6,000 for guardians and trustees).

General list of required documents:

• A written application addressed to your employer requesting a tax deduction for the child(ren);
• Birth certificate of the child (or children). This also applies to adopted children; here you need a copy of the adoption certificate;
• Certificates of child disability, if the child is one;
• Certificates from the child’s place of education (subject to receiving a deduction for a child over 18 years of age studying full-time at an educational institution);
• Marriage certificate.

Procedure:

1. Write an application for a standard tax deduction for a child (children) addressed to the employer.
2. Prepare copies of papers (see above).
3. If the employee is the only parent, the kit must be supplemented with a copy of a document confirming this fact (perhaps the death certificate of the second parent).
4. If the employee is a guardian or trustee, the kit must be supplemented with a copy of the document on guardianship or trusteeship.
5. Contact your employer with an application for a standard tax deduction and copies of all papers.

Important!

If the taxpayer has several employers, he will have to choose. If there is only one parent, he is entitled to double the deduction. One of the spouses can also receive a double amount if the other refuses the deduction in writing. However, if the second spouse simply does not have taxable income, and therefore no right to deduction, then the first spouse cannot count on double the amount.

In 2021, it will be possible to receive a tax deduction without a declaration

Already in the spring of 2021, the process of obtaining a deduction can be automated and therefore simplified. On January 26, the State Duma adopted in the first reading a bill on providing personal income tax deductions online.

The Federal Tax Service promises that in order to return personal income tax, it will be enough to simply fill out an electronic application generated in your personal account on the Federal Tax Service website. You won’t have to worry about filing declarations and certificates. And tax authorities will be able to receive information about the right to deduction without the participation of taxpayers. For example, if the purchase of an apartment is carried out with the participation of a bank, then the information necessary for a tax deduction will be received by the tax authority from the bank.

The law will make life easier for many.
The pandemic has shown us how important it is to develop digital technologies, to make access to government services remote, so that people can use them in any situation. Vyacheslav Volodin Chairman of the State Duma

Earlier, the press service of the Federal Tax Service explained to Rossiyskaya Gazeta that the improved procedure will reduce the time required to receive deductions - from 3 to 1.5 months.

Leading regions in terms of the number of tax deductions provided (thousands)

Moscow

Source: Federal Tax Service, data based on the results of 2021.

There are five types of personal income tax deductions:

• Standard (for children, veterans of the Great Patriotic War, disabled people, Chernobyl survivors, “Afghans”, Heroes of the USSR and Russia with state awards);
• Social (for charity, training, treatment, pension contributions to non-state pension funds, additional insurance contributions for funded pension);
• Property (sale, purchase, construction of housing, acquisition of land);
• Professional (for royalties, income of individual entrepreneurs, persons engaged in private practice);
• Investment (for the sale of securities).

It is permissible to claim a tax deduction for a specific year in several categories at the same time, for example, to receive it immediately for children, treatment, charity and sale of housing. You can apply for a deduction within three years after the tax period. That is, for example, in 2021 it will be possible to return money for 2021, 2017 and 2021.