Property tax deduction when buying a property

Property tax deduction is granted to citizens who have made the purchase of an apartment or the construction of an individual house, as well as in a number of other cases. It does not matter whether a person bought an apartment in a new house or in the secondary real estate market. A citizen of the Russian Federation may exercise this right only once in a lifetime. However, not all buyers of real estate are aware of this possibility or use it, and therefore the procedure for obtaining a tax deduction is rarely used in the market. The mechanism of property tax deduction is regulated by Art. 220 of the Tax Code of the Russian Federation, with which it is desirable to familiarize yourself. For the state, this procedure is part of a set of measures to stimulate the real estate market and reduce the share of gray wages in the labor market. The tax deduction applies to the following situations:
— buying an apartment in the primary or secondary housing market;
— construction of an individual house;
— repair and finishing works;
— payment of interest on the mortgage.

The limit of payment of tax deduction
The state returns to the applicant property tax deduction in the amount of not more than 13% of the costs of property, while taking into account the costs of up to 2 000 000 rubles. This means that if you bought an apartment for 8 000 000 rubles, the amount of tax deduction is charged as 13% on 2 000 000 rubles, i.e. 260 000 rubles. The remaining 6 000 000 rubles are not taken into account when calculating the deduction. If you purchased a property for less than 2 000 000 rubles, for example, you bought a Studio apartment for 1 000 000 rubles, you can get a property tax deduction as 13% of 1 000 000 rubles, i.e. 130 000 rubles. The remaining part of the maximum amount of tax deduction of 260 000 rubles you can get the next time you buy a property. If you bought an apartment together with your spouse (s) in common ownership, each of the spouses has the right to return up to 260 000 rubles.

Property tax deduction and mortgage
In the case of buying a home with a mortgage loan, you are entitled to receive a property tax deduction from the real interest paid on the mortgage. The maximum base for the calculation of the tax deduction in this case is 3 000 000 rubles, and the deduction accordingly 390 000 rubles. If the mortgage was issued before 2014, the amount of interest payment is not limited. However, the payment of a tax deduction from the interest on the mortgage is possible only once and only for one property. If you bought an apartment before 01.01.2014 and received a tax deduction for it, you lose the right to further deductions, regardless of the value of the apartment.

Restrictions on the payment
When buying a home in the calculation base for the calculation of the tax deduction does not include the amount of the parent capital. However, for example, if the cost of an apartment is 5 000 000 and you spent 1 800 000 rubles of their own funds, you put a tax deduction in the amount of 13% of 1 800 000, i.e. 234 000 rubles. Payment is also not made to so – called interdependent persons, or in other words, to relatives. If you bought an apartment from your relative, then you are not entitled to a property tax deduction. The full list of related parties is specified in item 5 Art. 220 of the Tax Code.

To whom tax deduction is guaranteed when buying an apartment
Property tax deduction is provided to citizens who have the amount of tax deductions (from wages, for example) for the previous year more than the requested amount of the deduction. Thus, unofficially working citizens cannot apply for this benefit. The rest will receive a tax deduction in the amount not exceeding the amount of tax revenues (income tax) paid in the previous year. If in the last year the amount of income tax paid by you was 120 000 rubles, in the current year you can claim the amount of tax deduction no more than this amount. The remaining amount up to 260 000 rubles will be available next year-based on the results of income tax payment in the current year. If you bought an apartment a few years ago, then over the years you may have already accumulated a total amount of income tax of more than 260 000 rubles, so you’ll be entitled to receive this benefit in full.

Documents for tax deduction
To obtain a property tax deduction you will need the following documents:
— application for tax deduction;
— extract the unified state register confirming the right of ownership of real estate;
— contract of sale of real estate or contract of DDU (the contract of share participation in construction) or contract of assignment of rights of claim or loan agreement with the Bank in case of mortgage;
— The act of acceptance of the object;
— notarized copies of payment documents (or originals);
— income certificate (so-called 2-NDFL);
— duly executed Declaration 3-NDFL;
— a copy of the marriage certificate (if the contract was made out for the spouse) and a written agreement in any form on the distribution of the tax deduction between the spouses;
— a copy of the birth certificate, if the property was issued for a minor child.
All of these documents can be submitted a few years after the acquisition of housing. Amount you put to return the tax deduction will not change – it will be calculated on the date of the right to this deduction.

How to get a tax deduction when buying an apartment
If you have collected all the necessary documents, you can use one of two options for obtaining a tax deduction. The first option is to obtain from your employer. To do this, you will need to write an additional application, and you will receive a monthly salary of 13% more until the amount of payment is equal to the amount of the tax deduction. The second option – you send to your tax office these documents by registered mail with an inventory and notification of delivery, and then wait for a one-time payment. Do not forget to attach your payment details for non-cash payment. After receiving your documents, the tax office carries out a Desk check on your application within the statutory period, and then you will receive a payment.

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