Property tax deductions when purchasing an apartment, house, or plot of land can be obtained in two ways:
— return the paid income tax through the tax office . In this case, at the end of the calendar year, an annual 3-NDFL declaration and documents for deduction are submitted to the inspectorate.
After this, the tax office returns the income tax (NDFL) paid for the year. The process of obtaining a deduction through the tax authority is described in detail here - “The process of obtaining a property deduction through the tax office.
— receive a deduction through the employer. In this case, after the right to deduction arises, the individual applies to the tax office.
After receiving confirmation of the deduction and transferring it to the employer, no income tax will be withheld from the employee when paying wages. This method is described in detail in the article “Obtaining a property deduction when purchasing an apartment through an employer.”
Since the main question facing those wishing to receive a property deduction is the question of which path is best to take, we will try to consider in detail the pros and cons of both methods.
How to return 13 percent from the purchase of an apartment?
Since 2014, the procedure for returning 13 percent of the purchase of an apartment has changed slightly: now the property deduction can be used several times (when purchasing several real estate properties) within a limit of 260 thousand rubles.
This limit is 13% of the maximum deduction amount for the value of real estate, which cannot exceed 2 million rubles. If housing was purchased (built) using loan funds, the taxpayer has the right to reimburse the amount of interest paid to the bank, but not more than 390 thousand rubles.
Multiple personal income tax refunds when purchasing an apartment will be able to be made only by those taxpayers who have not used this tax benefit before, since before 2014 such a deduction could only be used once in a lifetime, regardless of the value of the property.
One more nuance should be taken into account: personal income tax compensation when purchasing an apartment can only be made in the amount of income tax actually withheld or independently paid by an individual. That is, if a person does not receive income and income tax is not withheld from him, then there is no source for tax refund.
The right to a tax deduction is ensured by subsection. 3 p. 1 art. 220 Tax Code of the Russian Federation. The standard procedure for exercising the right to a property deduction is to contact the tax service at the place of registration of the taxpayer. In this case, you will need to collect a package of necessary documents (subclause 6, clause 3, article 220 of the Tax Code of the Russian Federation) and submit them to the Federal Tax Service. The waiting period for payment is 4 months, of which 3 are allocated for conducting a desk audit (clause 2 of Article 88 of the Tax Code of the Russian Federation) and 1 for making the payment itself (clause 6 of Article 78 of the Tax Code of the Russian Federation).
To receive a tax refund, several conditions must be met:
- an individual must be a payer of income tax in the amount of 13%;
- the deduction is given only for real estate purchased in Russia;
- to pay for the property, the taxpayer’s personal funds or money given to him under a mortgage loan were used;
- the parties to the purchase and sale transaction are not close relatives or other related persons.
The time that has passed since the acquisition of real estate does not matter for obtaining a property deduction; however, only the personal income tax that has been transferred to the budget over the last 3 years can be returned.
In this case, the taxpayer will need to submit a declaration in Form 3-NDFL for 3 years in order to calculate the amount of tax paid for this period. The article “How to fill out the 3-NDFL declaration for 3 years?” will help you with this.
The right to use the property deduction is also granted to the parents of a child who has not reached the age of majority, if an apartment is purchased specifically for him.
Does a child, upon reaching the age of majority, have the right to claim a property deduction if the parent purchased an apartment for him and has already taken advantage of the deduction? The answer to this question is discussed in detail in the Tax Guide from ConsultantPlus. Get trial access to the system and study the material for free.
General concept of tax deduction for individual entrepreneurs
All individual entrepreneurs are taxpayers and, depending on the chosen taxation system, pay various taxes to the state budget.
The obligation to pay a particular tax is specified in the Tax Code of the Russian Federation. Find out what tax changes individual entrepreneurs need to take into account in 2021 here.
However, there are situations when it becomes possible to reimburse the amounts of taxes paid. All of them are described in the Tax Code of the Russian Federation and are called “tax deductions”. A tax deduction is the right of a taxpayer to reimburse a certain amount of taxes paid or to be released from the obligation to pay them.
For information about what a VAT tax deduction is, see the material “What are VAT tax deductions” .
What documents are needed to receive a personal income tax deduction when buying an apartment?
In accordance with sub. 6 clause 1 art. 220 of the Tax Code of the Russian Federation, in order to receive a personal income tax deduction when purchasing an apartment, the taxpayer must collect and submit the following documents to the Federal Tax Service:
- A contract of sale and purchase (exchange) for a residential property (apartment, room or share in them) and also a receipt for payment for it (subclause 7, clause 1, article 220 of the Tax Code of the Russian Federation). All documents are submitted in the form of certified copies.
- An agreement on shared participation in construction or a deed of transfer of such a construction project. The document is submitted as a certified copy.
- If an apartment was purchased as a property for a child under 18 years of age, then it is necessary to provide a copy of his birth certificate, as well as permission from the guardianship authority to complete such a transaction.
- You will also need a certified copy of the certificate of registration of ownership of the commissioned real estate (for housing under construction this document is not needed, the transfer and acceptance certificate of the property will be sufficient). From July 15, 2016, instead of a “pink” certificate, government agencies issue an extract from the Unified State Register of Real Estate Rights.
- Copies of the TIN assignment certificate and the applicant’s identity document.
- In addition, it is advisable for the taxpayer to submit a certificate of employment in Form 2-NDFL. This certificate is not named in the list of required documents, but controllers have the right to request it. See here for details.
See also the article “Where you can get (get) a 2-NDFL certificate.”
To receive a deduction through the tax department, you will need to submit a declaration in Form 3-NDFL. It is submitted starting from the first quarter of the year following the tax period in which the property was purchased.
ATTENTION! To reimburse personal income tax for 2021, fill out 3-NDFL using the updated form.
In order to indicate the chosen method of obtaining a property deduction, as well as the bank details of the taxpayer, an application for a personal income tax refund must be submitted. The deadline for submitting it is not regulated, but payments will begin only 1 month after its submission. In this regard, it is advisable to submit such an application along with a complete package of necessary documentation.
For a complete list of documents, see the article “Documents for tax deductions when purchasing an apartment.”
After the expiration of the allotted period for conducting a desk audit (3 months if the tax is returned by the inspectorate, and 30 days if the personal income tax is no longer withheld by the employer), the tax department will inform about its decision to provide a property deduction or a refusal. In most cases, the refusal to provide a property deduction is due to inaccuracies made when filling out the declaration. The taxpayer will be able to re-submit the return, but the deadline for conducting the desk audit will not change.
Find out how to get a property deduction when participating in shared construction in the authoritative opinion of ConsultantPlus experts. Get trial access to the system for free.
conclusions
In conclusion, let's summarize:
— the most hassle-free method of obtaining a deduction that guarantees maximum return is the return of money through the tax office based on the results of the calendar year;
— for those who do not want to wait until the end of the year, but want to start receiving a refund of deductions as quickly as possible, the method of returning the deduction through the employer will be more acceptable.
If you have not yet purchased a home, we recommend our partner’s site-guide, APARTMENT-Bez-AGENTA.ru. This is an educational site for those who want to understand the rules for buying and selling apartments.
How to fill out a tax return?
To obtain the right to a property deduction, an individual taxpayer will need to fill out a tax return 3-NDFL. For the report for 2021, the form was approved by order of the Federal Tax Service dated August 28, 2020 No. ED-7-11/ [email protected]
5 pages of the reporting document must be completed: title page, sections 1 and 2, appendix 1 and appendix 7.
There should be no difficulties in filling out the title page, because it contains personal information about the individual and the tax authority to which the declaration will be submitted.
Features of filling out the declaration:
- Section 1 contains the final results of tax calculations: for reimbursement or additional payment.
- Section 2 shows the entire sequence of calculating the tax base and the final tax amount.
- Appendix 1 contains information about income from a certificate issued by the employer in Form 2-NDFL.
- Appendix 7 contains information about the purchased apartment, as well as the amount of property deduction.
If the declaration is filled out manually, then on the printed form the entered data should be aligned to the left. If the declaration is filled out using a computer program, then along the right edge. Double-sided printing is not permitted, and pages should not be stapled to avoid damaging the bar codes on the left.
Read more in the article “Filling out the 3-NDFL declaration for property deduction.”
How to apply for a property deduction?
You can submit documents for the right to use a property deduction in one of the following ways:
- Personally. To do this, you need to find time and visit the Federal Tax Service at your place of registration. The disadvantage of this method is the waste of personal time and the need to answer possible questions from the tax inspector.
- By mail. It is better to send documents by a valuable letter with a list of attachments. The disadvantage of this method is that if the documents are not in order, then it will be possible to find out about this only after 3 months, allotted for conducting a desk audit.
- Through the taxpayer’s personal account by filling out the proposed declaration form online. Scans of documents confirming expenses for the apartment must also be attached to the declaration. The advantage of this method is that the taxpayer will be able to track the status of the return verification and the progress of the submitted tax refund application.
For more information about filling out the 3-NDFL declaration online, read the article “How can you submit a 3-NDFL declaration to the tax office.”
What construction costs cannot be included in the deduction?
You will not be able to receive a deduction for expenses for:
- redevelopment or reconstruction of an already built house;
- reconstruction of an already built house (a floor or extension was added);
- installation of plumbing, shower, gas or other equipment;
- construction of additional buildings or structures on the site (for example, a garage, fence, bathhouse, barn, etc.)
Example: Sidorov V.V. built a residential building, a brick garage and a bathhouse on his site. Sidorov can only include in the tax deduction the costs of building and finishing the house.
Results
Individuals who pay personal income tax when purchasing an apartment can take advantage of the right to a refund of previously paid tax or benefits from exemption from the withholding of 13% on income received at the place of work. In order to exercise this right, you must collect a complete package of documents and submit them to your Federal Tax Service.
The maximum amount of property deduction provided once for life is 260 thousand rubles, and you can use your right to it as many times as you like until the limit is completely exhausted. This applies to residential real estate purchased since 2014, or cases where the property was purchased earlier, but the taxpayer did not use the right to such a deduction at all.
The waiting period for personal income tax reimbursement when purchasing an apartment is no more than 4 months, and the amount of tax declared as subject to reimbursement in the form of a payment to the taxpayer’s account will be transferred to him immediately, and receiving a deduction from the employer will take longer.
Sources:
- Tax Code of the Russian Federation
- Order of the Federal Tax Service dated August 28, 2020 No. ED-7-11/ [email protected]
You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.
Who is eligible for the deduction and who is not?
The right to refund paid taxes is granted only to citizens of the Russian Federation who reside in the country for at least 183 days during the year. An exception is only for those liable for military service who are absent from Russia on duty, and residents studying abroad or undergoing treatment outside the country, but not more than 6 months during the year.
In addition, persons living in the Russian Federation must be officially employed and deduct 13% of their salary monthly. This rule also applies to pensioners, who can receive a deduction from the years they worked, provided that it was no more than 3 years ago.
Receipt of a deduction will be denied:
- Foreign citizens working in the Russian Federation;
- If the property was purchased by a citizen of the Russian Federation, but abroad;
- If it is proven that one person financed the purchase, and another became the owner;
- When purchasing real estate from relatives or an employer.
Conclusion: When buying a plot to build a house or a ready-made cottage, spending a little time collecting the necessary documents can save you up to several hundred thousand rubles. If you fill out the documents correctly and follow all the regulations, the procedure for receiving money will take several months.
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