What expenses does the buyer bear when buying an apartment?

Last modified: January 2021

The transfer of ownership in a purchase and sale transaction entails the need to collect, prepare documents and subsequently register. At each stage of the transaction, costs arise on the part of the seller and the buyer. If funds for the purchase are limited, it is especially important to find out in advance what expenses the buyer incurs when purchasing an apartment.

There are several cost items when re-registering an owner, and the specific list depends on the circumstances of the acquisition of real estate and the requirements of the parties to engage a lawyer or notary.

What you have to pay for when buying a home with a mortgage

The main payment costs fall on the seller, since it is he who must prepare the living space for sale. The list of documentation depends on the conditions of the bank, the requirements of Rosreestr and various nuances identified by lawyers.

What does the buyer pay when purchasing a home with a mortgage:

1. Technical passport of the real estate (minimum cost 2,200 rubles, price varies in each region). A BTI employee takes measurements and generates a technical passport for the property. All costs are borne by the seller.
2. If the former owner did not legalize the redevelopment, then the buyer must carry out the appropriate procedure, but all costs are borne by the seller, making discounts. Or you can agree with the former owner so that he eliminates the redevelopment before the transaction.
3. Appraising an apartment is not the responsibility of the current owner, so the buyer pays for the services of an appraiser (the cost varies from 5 to 8 thousand rubles).
4. If the purchaser has found a seller who has entered into an agreement with a realtor, then it is the purchaser of the living space who pays for the services of the intermediary (approximate cost of 10-25 thousand rubles).
5. State fees for the transfer of rights are paid by 2 parties to the transaction, dividing the amount into equal parts.
6. Also, the seller and the buyer pay equally for drawing up the purchase and sale agreement.

Real estate insurance with mortgage

With a mortgage, the bank takes the purchased property as collateral until you pay off. Therefore, real estate insurance is a mandatory requirement for a bank to issue a mortgage. It is impossible to refuse insurance; the borrower’s obligation to obtain insurance for the collateralized property is enshrined in law.

Insurance plays into the hands of the bank and the borrower. For the buyer, having an insurance policy is a guarantee that in the event of destruction or damage to the property, the borrower will not be left without property and with a huge debt to the lender. For a bank, having insurance is a guarantee of receiving your money in the event of an emergency with real estate. If the insured home is destroyed, the bank gets its money, and the borrower may not pay the mortgage.

The cases against which real estate is insured are usually individually specified in the contract. But we can highlight the main situations when the insurance company will pay compensation:

• natural disasters, including fires, floods, earthquakes and so on;
• accidents in utilities, for example, flooding or household gas explosions;
• actions of third parties in the form of hooliganism and vandalism.

The insurance policy must cover that part of the cost of housing for which the bank gave you money. For example, if you bought an apartment according to the scheme: 40% of your own funds and 60% from the bank, then the policy should be issued for these 60%.

It is impossible to answer the question about the cost of insurance with certainty. It depends on the loan amount, bank requirements, locality and property characteristics. For example, if the apartment has a gas pipeline, then insurance will be more expensive, as the risk increases.

Additional expenses

Usually the costs of registering the purchase and sale of property are borne by the acquirer, but by agreement the amount can be divided in half with the owner of the apartment.

1. You will have to pay for the services of a legal advisor or notary. A lawyer will charge up to 12 thousand rubles for preparing a package of documents. And the notary will have to pay an amount calculated depending on the price of housing (the minimum charge is 8,500 rubles, if the property costs from 5 million rubles - from 35 thousand, from 9 million rubles - 70 thousand, from 12 million rubles - from 100 thousand).
2. If you need to rent a safe deposit box, you will have to pay 1200 rubles. per month.
3. You can order from the bank. The cost is estimated from 0.1% of the total amount.
4. For the procedure for registering the transfer of ownership of housing in Rosreestr you will have to pay from 3 to 6 thousand rubles.
5. Written consent of the second spouse to the transaction, certified by a notary – 300 rubles.
6. Signing a power of attorney – 500 rubles.

If necessary, the mediator can check the purity of the procedure from a legal point of view. You will have to pay from 10 to 15 thousand rubles for the inspection.

There may be some difficulties with the sale of the home if the seller’s relatives are against it. In this case, the case is considered in court. All costs are borne by both the plaintiff and the defendant.

Property deduction for finishing an apartment

According to abc. 12 subp. 2 p. 1 art. 220 of the Tax Code of the Russian Federation, the actual costs of purchasing an apartment, room or share(s) can include:

• expenses for the acquisition of an apartment, room or share(s) in them or rights to an apartment, room in a house under construction;
• expenses for the purchase of finishing materials;
• expenses for work related to finishing the apartment, as well as expenses for developing design estimates for finishing work.

However, expenses for finishing an apartment can be deducted only if the share participation agreement specifies the acquisition of an unfinished apartment (rights to an apartment) without finishing or a share(s) in it

.

If it is impossible to determine under the contract that an unfinished apartment is being purchased, and also if the contract does not indicate that it was purchased without finishing, then the tax inspectors will refuse a deduction for finishing.

The Ministry of Finance of Russia reminds us of this in letter dated August 6, 2021 No. 03-04-05/63167.

Apartment finishing works include, in particular:

• plastering works;
• carpentry and joinery work;
• interior decoration;
• wall cladding/covering, floor covering;
• installation of windows, window frames, doors.

Please note that it is not possible to take into account costs associated with the redevelopment and reconstruction of premises, the purchase of plumbing and other equipment, registration of transactions, etc.

Read in the berator “Practical Encyclopedia of an Accountant”

Simplified property deduction

What to do if the seller still has debts on utility bills

If the owner of the property being sold still has utility debts, he will not be given a personal account and a certificate (permission to carry out the transaction). This is not scary, since these papers are not required to register the transaction, but they are important to the buyer.

In this case, the buyer makes a deposit to the seller in the amount of the debt and covers the debt. After this, they enter into a contract for the sale of housing. But you can sign the document immediately if the seller deducts the debt from the total amount. After which the new owner will be able to pay utility bills.

Who pays state fees?

The state duty is traditionally paid by the acquirer of ownership of the object under a sales contract , that is, a receipt is issued to the buyer, which must also indicate his passport details. If spouses purchase an apartment for joint use, one of them can then indicate his name and make the payment himself.

The amount of state duty for standard real estate in Rosreestr is stable and amounts to 2,000 rubles. The state exempted from payment only individuals who are legally recognized as low-income citizens (they must be registered and have the appropriate certificate with them).

Important! This amount of state duty when completing a purchase and sale transaction is established for an individual, both for a citizen of Russia and for a national of another country.

Minor citizens are not exempt from paying the fee , and their receipt must be paid to their parents or guardians. Thus, if you represent the interests of a child under 14 years of age in a purchase and sale transaction, put your name on the receipt, but only the legal representative has the right to do so. An older child has the right to put his name on the receipt and even pay for it himself using his passport (you can learn about the specifics of registering the purchase of an apartment for a minor in our article). If the transaction is made to take ownership of common property in an apartment building, and this fact is stated in the purchase and sale agreement, the state duty will be only 200 rubles.

If a transaction involves several participants at the same time, and three or more shareholders enter into rights, the state duty is divided equally among everyone. For example, three buyers, then each contributes 667 rubles (666, 67 must be rounded). In this case, a receipt is issued to each acquirer of rights and is paid by him. We talked in more detail about registering the purchase of an apartment in joint ownership in this material.

Home sales tax

For residents of the Russian Federation, the general tax rate is 13%. This part of the costs is borne by the seller. But it is not always taxable. According to the innovations of January 2021, those who became the owner more than 5 years ago should not pay tax on the sale of residential space on the secondary market. If you purchased housing before January 2021, then the living space will not be subject to taxation if it has been owned for longer than 3 years.

But it is worth considering a few more cases when, after three years of owning a living space, you can sell it and not pay tax. This is possible if:

• the property was received by gift or will;
• the apartment is privatized;
• living space was received under a rent agreement with a dependent.

The tenure period begins to count from the date specified in the Unified State Register.

Preparation of documents for a mortgage

To take out a mortgage, the borrower needs to prepare a standard package of documents:

• passport;
• completed borrower application form;
• employment documents - certified copies;
• documents confirming the availability of sufficient income - a 2-NDFL certificate or a certificate in the form of a bank;
• documents on marital status - marriage certificate, birth certificate of children (if any);
• information about your own real estate - in the case of a mortgage secured by an existing apartment;
• an account statement containing the money for the down payment.

At this stage, the borrower does not incur additional costs unless he hires an intermediary to submit an application to the bank. An exception is if a notarized copy of a document is required. Then you will have to pay the notary fee.

Refund of money spent on tax payment

If you spent money by paying tax on the purchase of property, you can get it back. This allows you to do this with a tax benefit (in another way it is usually called a “tax deduction”). This privilege will allow the taxpayer to recover a certain amount.

To calculate, you need to know when you purchased the apartment and how much it was sold for. For living space purchased after January 1, 2014, the maximum sale amount for a refund is calculated within 2 million rubles. That is, the acquirer has the right to return the money - 13% of 2 million rubles, which is 260 thousand rubles. If the property is taken out under mortgage lending, the return amount is calculated at a maximum of 3 million rubles (390 thousand rubles).

Realtor services

The activity of a realtor is used by both parties to a purchase and sale transaction and should be included in the general expenses when purchasing an apartment. However, the nuances of payment in practice may differ significantly. The commission percentage to the intermediary can be added to the base price of the apartment, which is indicated by the seller. In this case, the realtor is actually paid by the buyer when he transfers the declared amount to the seller with the commission taken into account.

Important! In other cases, the real estate company may request a percentage of the total amount of the transaction. Then, in practice, the seller will pay the commission, since in the end he will receive a reduced amount for the property being sold.

For the services provided, the agent can request either a certain amount (fixed in the contract) or a certain percentage of the cost of the apartment. In the first case, the commission amount can range from 30–50 thousand rubles, in the second – approximately 2–5% of the property price.

Nuances when purchasing housing on the secondary market

When purchasing property on the secondary market, it is worth considering some nuances. The most important thing is that the buyer has to order a check of the legal purity of the purchased apartment. This is important in order to exclude a situation where, after purchasing a home, third parties begin to lay claim to it.

This is not a required service, but desirable. It is better to entrust this issue to a specialist. You can, of course, find out everything yourself: request certificates from Rosreestr, carefully study the documents on the right to own housing, find out if there are any encumbrances, whether the apartment was inherited or purchased.

If you contact a lawyer, the cost of the inspection, depending on the complexity of the procedure and the parameters of the living space, will be at least 5 thousand rubles.

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Life and health insurance

The mortgage can be taken out for a term of up to 30 years. When receiving a loan, the borrower may not even think about the fact that his life and health may suffer during this time. But during the mortgage period, the buyer may become ill, injured, or lose his ability to work. As a result, he will not be able to repay the debt to the bank.

The insurance policy protects the interests of the borrower and the bank. For the buyer, the policy is a guarantee that in the event of injury and disability, the insurance company will pay off his debt to the creditor. For the bank - a guarantee of receiving their money. If an insured event occurs, the bank will either pay the mortgage payments while the borrower is on sick leave, or the insurance company will completely cover the mortgage if the borrower dies.

Insured events are specified in the contract. The situations when the insurer will pay money to repay the mortgage are as follows:

• temporary disability due to illness;
• permanent disability due to disability or serious illness;
• death of the borrower.

The cost is determined individually. The older the borrower, the more expensive the insurance. In addition to age, the insurer takes into account: gender, type of activity, hobbies, presence of diseases, and so on.

Life and health insurance for a mortgage is completely voluntary. No matter what the bank manager says, they cannot force you to do this. However, if you don't have insurance, the bank will likely raise your mortgage interest rate. Therefore, it is important to calculate in advance what is more profitable - buying a policy or overpaying on a mortgage.

Choosing a bank

First, we choose a bank that will agree to give you a mortgage, and then, knowing the available amount of money, we look for a housing option that suits you.

Otherwise, a situation may arise that the ideal apartment has been found, but banks refuse to issue a loan for the required amount or impose unsuitable conditions on you.

For example, to apply for a mortgage loan from VLADBUSINESSBANK JSC (https://www.vlbb.ru), you need a package of documents:

• copy of passport (all pages);
• SNILS;
• salary certificate (2-personal income tax for the last 12 full months, certified by the employer);
• a form indicating the amount and term of the loan.

Once approved, you will have approximately 3-4 months to find an apartment. If during this time the search is not successful, then the application for a mortgage loan will need to be submitted again.

Here are the factors that increase the likelihood of a positive decision on granting you a mortgage loan:

• you have a large official salary;
• good credit rating;
• there is a large amount for a down payment;
• the requested loan amount is relatively small;
• there is liquid real estate that can act as a guarantor.

Cost of document preparation

The price is determined taking into account several factors:

• status of the person preparing the paperwork;
• property value;
• contract form.

Simple written form

Current legislation, in particular the Federal Law “On State Registration of Real Estate” of 2015, provides that a transaction for the purchase and sale of an apartment can be concluded in simple written form, provided that the housing has one adult and capable owner.

The paperwork can be completed by:

1. One of the sides. Now there are quite a lot of instructions on this matter on the Internet, there are sample documents. You can simply download one of them and fill it out yourself. There is a danger of choosing an outdated or illiterate sample, the use of which can hide a number of risks and lead to financial losses. If the seller or buyer is legally competent, and the law allows, in a particular case, the transaction to be completed in simple written form, then everything must be done independently. You will be able to save some good money.
2. Realtor. As a rule, people in this category have an established price list. Typically, they charge 1% of the value of the property. But a lower limit for the cost of services is also set. In the regions it is approximately 5 thousand rubles. In the capital it is much higher.
3. Professional lawyer. This could be a lawyer or just a person with a higher education in his specialty. The price of the transaction can be any. The specialist and his client usually individually agree on the amount of remuneration.

It turns out that there is no fixed cost for services if the contract is drawn up in simple written form. With the notary form, things are somewhat different.

Notary paper

According to Art. 333.24 of the Tax Code of the Russian Federation, a notary has the right to take 0.5% of the cost of real estate for registration of a transaction. The price appearing in cadastral documents is taken into account. It is from this value that, by the way, the property tax is now taken. Considering the fact that an apartment can cost 500 thousand, or maybe 20 million, the legislator established:

• The minimum amount paid to the notary cannot be less than 300 rubles.
• Maximum – no more than 20 thousand rubles.

The requirement of the law is quite clear: in one case the notary may receive too little, in another – too much. The legislator does not allow this. If the Tax Code of the Russian Federation did not have such a restriction, then a notary would only need to help sell one piece of real estate worth several million dollars a year, and not work for the remaining 364 days.

Each notary has the right to demand payment for legal and technical services. Their cost is determined by the Notary Chamber of the region. On average, UPTH cost from 2 to 6-7 thousand rubles.