What is a tax deduction when buying an apartment and how to get it in 2021

What is a property tax deduction?

According to the legislation of the Russian Federation, when purchasing an apartment, house or land, you can return part of the money in the amount of personal income tax paid in the past.
The tax deduction is described in Art. 220 Tax Code of the Russian Federation. The benefit is aimed at providing citizens with the opportunity to purchase or improve housing conditions. If you officially work, pay personal income tax and purchased an apartment or house, you have the right to return up to 13% of the cost of housing. In addition, you can also get back up to 13% on mortgage interest and some other costs.

How much money can I get back?

If you:

tax resident of the Russian Federation, that is, you live in the country for at least 183 days a year;
work officially and pay personal income tax;
bought real estate in Russia with your own money or with a mortgage;
You already own the housing or have a transfer and acceptance certificate (if the housing is in a new building);

then the state is ready to return you 13% of the value of the property you purchased. At the same time, there is a limit - the maximum amount from which the tax deduction will be calculated. It amounts to 2 million rubles for the purchase or construction of housing.

You can also receive a tax deduction on the interest paid on the loan if the apartment was purchased with a mortgage. Here the limit is 3 million rubles.

Thus, in total you can return up to 650 thousand rubles: up to 260 thousand for the purchase of housing and up to 390 thousand for interest paid on the mortgage.

If the property you purchased costs less than the limit of 2 million, then the tax deduction amount will be calculated from the purchase amount, and the remaining deduction amount can be received after purchasing other properties. But the mortgage interest deduction can be used only once and when purchasing one property. These rules apply to homes purchased after 2014.

If property was acquired during marriage, then each spouse can receive a tax deduction. That is, in total, the family can return up to 1.3 million rubles.

Note! If the price of the purchased apartment is more than 2 million, but less than 4 million rubles, then the spouses will be able to decide how much deduction each of them will receive. Let's say an apartment costs 3 million. Then, for example, the husband can apply for a deduction from the maximum amount - 2 million, and the wife - from the remaining million.

By the way, the tax deduction applies not only to mortgage agreements. According to the letter of the Ministry of Finance dated 04/08/2016 No. 03-04-05/20053, the taxpayer has the right to receive a deduction from interest on other targeted loans (credits), if the terms of the agreement stipulate that the money will be spent on purchasing housing in Russia.

In some cases, the buyer may not receive a tax deduction

It does not apply to:

housing paid for by the state or employer
maternal capital
purchasing housing from so-called interdependent citizens - close relatives (spouse, parent, child, full and half brother/sister, guardian, ward)
buyer's income taxed at a rate other than 13%

In what cases can you get a property deduction?

By taking advantage of the property deduction, you can return part of the expenses for:

acquisition and construction of housing (apartment, private house, room, their shares);
acquisition of a land plot with a residential building located on it or for the construction of a residential building;
interest on targeted loans ( mortgage loans ) for the construction or purchase of housing;
finishing of housing, if it was purchased from the developer without finishing.

Deduction is NOT provided :

when purchasing real estate from dependent persons: spouse, children, parents, brothers/sisters, employer, etc.;
if a person has already exhausted his right to property deduction (see One-time deduction).

When can you use the deduction?

If an apartment is purchased on the secondary market, then you can apply for a tax deduction immediately after registering the transaction. If in a new building, then only after the house has been put into operation and the apartment acceptance certificate has been signed.

Please keep in mind that the amount of the tax deduction cannot exceed the amount of taxes you paid for the year or monthly personal income tax payments. But this does not mean that you will not receive money. You can apply to the tax office for deductions annually until you reach the limit.

Tax deduction amount

The amount of tax you can get back is determined by two main parameters: your expenses when buying a home and the income tax you paid.

In the total amount, you can return up to 13% of the cost of housing or land, but the maximum amount for deduction should not exceed 2 million rubles (that is, you can return a maximum of 2 million rubles x 13% = 260 thousand rubles). Note: for housing purchased before 2008, the maximum deduction amount is 1 million rubles.
For each year, you can return no more than you transferred to the personal income tax budget (about 13% of the official salary). At the same time, you can return the tax over several years until you return the entire amount (see When and for what period can you get a tax deduction?)
In case of purchasing housing with a mortgage before January 1, 2014, income tax on expenses for paying mortgage interest is refunded in full without restrictions.
If the housing was purchased with mortgage funds after January 1, 2014, then the interest deduction is limited to 3 million rubles (that is, you can return a maximum of 3 million rubles from mortgage interest x 13% = 390 thousand rubles. ).
When purchasing expensive housing, there are situations when the amount returned on mortgage interest exceeds the return on the direct purchase of housing. Please note: the limit on the amount of return for the main property deduction for one person is 260 thousand rubles, the deduction for credit interest is 390 thousand rubles. If an apartment was purchased after 01/01/2014 by married spouses, each spouse can receive a property deduction in the amount of these limits. You can find out more about this information in the article: Peculiarities of obtaining a property deduction when buying a home by spouses.

Example 1: In 2021, Ivanov A.A. I bought an apartment for 2.5 million rubles. At the same time, in 2021 he earned 500 thousand rubles and paid 65 thousand rubles in personal income tax. In this case, the maximum amount that Ivanov A.A. will be able to return it is 2 million x 13% = 260 thousand rubles. But directly for 2021, he will be able to receive only 65 thousand rubles, and 195 thousand will remain for return in subsequent years.

Example 2: In 2021 Vasiliev V.G. bought an apartment for 1 million rubles. In 2021 Vasiliev V.G. I learned about the possibility of a tax deduction and decided to apply for it. In total, Vasiliev can return 1 million rubles. x 13% = 130 thousand rubles. If we consider that Vasiliev earned 400 thousand rubles annually in 2018-2020 and paid 52 thousand rubles in personal income tax, then in 2021 he will be able to return: 52 thousand rubles. for 2021, 52 thousand rubles. for 2021 and 26 thousand rubles. (balance of 130 thousand) for 2021.

Additional and more complex (mortgage interest, shares, etc.) examples of deduction calculations can be found here: Examples of calculating property tax deductions.

Who is entitled to it?

The first question faced by citizens who want to receive a tax deduction is: “Who is entitled to it?” The current legislation stipulates that all persons who work officially and pay monthly income tax on their earnings can count on it. It is this 13%, transferred to the tax office, that you can return in the event of:

acquisition of residential premises;
Read also: The procedure for filling out forms of primary accounting documentation for accounting of fixed assets
construction of a new house;
carrying out repair work in the purchased residential premises (it is necessary to preserve and provide documentary evidence of the work performed and purchases in the form of acts, receipts, etc.);
purchasing real estate on credit (to pay off interest).

Those who took advantage of this opportunity earlier (before 2014), exhausted the legal limit, or bought real estate from close relatives or with the participation of an employer are not entitled to receive a tax deduction. There is also no provision for refunds to officially unemployed persons and citizens who took advantage of state support programs, including maternity capital, when purchasing an apartment or house.

Attention! If you purchased a home and used your right to a tax deduction before 2014, you will no longer be able to use it, no matter how much you received.

After 2014, changes in legislation came into force that tied the possibility of obtaining a tax deduction to the maximum amount of compensation. Thus, it has become possible to use this right until the limit of 260 thousand rubles is completely exhausted.

Such changes have become especially convenient for co-owners of real estate. When registering an apartment or house for several owners, each of them receives the right to obtain a tax deduction taking into account the value of its part in the common property. Previously, each of them could receive compensation in an amount not exceeding 130 thousand rubles and lost the opportunity to exercise the right to deduct in the future. Now they are not limited by the number of transactions, but, like others, can receive compensation from the INS up to the exhaustion of the limit.

But situations often arise when pensioners purchase real estate. Is it possible to apply for tax compensation in this case? Modern legislation allows this in two cases:

if the pensioner continues to work;
the citizen is not currently working, but worked for the last 3 years before he became eligible for the deduction.

One-time right to deduction

The Tax Code limits the possibility of multiple use of deductions when purchasing a home. At the same time, the restrictions were changed from January 1, 2014 (the changes are described in detail in our article Changes in the property deduction when purchasing a home in 2014).

Currently the restrictions apply as follows:

For housing purchased before January 1, 2014 , you can use the property deduction only once in your life (paragraph 27, paragraph 2, paragraph 1, article 220 of the Tax Code of the Russian Federation). In this case, the purchase price does not matter. Even if you took advantage of a deduction of 10 thousand rubles, you will never be able to receive a larger property deduction when purchasing a home.

Example: in 2013 Sakharov A.T. purchased an apartment for 1.5 million rubles and took advantage of the tax deduction after the purchase. In 2021 Sakharov A.T. bought an apartment again for 2 million rubles. He will not be able to receive a deduction of 500 thousand rubles up to 2 million.

When purchasing a home after January 1, 2014 (unless you took advantage of the deduction earlier), the property deduction can be used several times, but the maximum amount of the deduction that you can receive for your entire life (excluding mortgage interest) even in this case is strictly limited to 2 million rubles (260 thousand rubles to be returned).

Example: at the beginning of 2021 Gusev A.K. bought an apartment for 1.7 million rubles. In September 2021, he also purchased a room for 500 thousand rubles. At the end of 2021 (in 2021) Gusev A.K. will be able to apply for a deduction of 2 million rubles: 1.7 million rubles for an apartment and get 300 thousand rubles for a room.

Please note: If you received only a basic deduction for housing purchased before January 1, 2014, then you can receive a tax deduction on interest when purchasing a new home with a mortgage. You can read more about this opportunity in our article Repeated property deduction for mortgage interest

You can find out more information about the restrictions on receiving a property deduction in the article: One-time property deduction when purchasing an apartment/house.

The amount of payments and the procedure for their execution

Every working citizen has the right to receive income tax compensation after purchasing real estate. Today there is a limit on the value of real estate from which deductions can be made. It amounts to 2 million rubles per person. In this case, 13% of the specified amount is returned to you, which equals 260 thousand rubles. If the price of the purchased property is less than the limit, then the citizen retains the right to receive the remaining amount in the future.

In addition, the amount of compensation directly depends on the amount of taxes that your company pays for you, since after all the documents are completed, you will only be transferred the previously paid amount to the budget. That is, if last year you paid income tax for the year in the amount of 40 thousand rubles, then when you apply for a deduction, you will receive exactly this amount as a deduction for this period.

Attention! To apply for a deduction, you must submit a Form 3 personal income tax declaration to the tax office at your place of registration, in which you should indicate the acquired property and its value. In this case, the calculation of the deduction amount will be made for the previous year or, in some cases, for the last 3 years.

In addition to these papers, you will need to provide originals and copies of the following documents:

passport and TIN;
certificate of registration in the Rosreestr of real estate or an act of transfer of property into the ownership of a citizen;
2-NDFL certificate for previously paid income tax (can be obtained at your place of work);
application for a refund for purchased real estate;
papers confirming the conclusion of the purchase and sale transaction and your expenses associated with the purchase of real estate.

When registering property as joint property of spouses, the INS may be required to provide an application for the distribution of deductions between married persons.

After submitting documents to the local branch of the ITS, inspection staff check them. This procedure takes about a month, after which funds are transferred to the citizen’s bank account specified in the application.

Attention! If necessary, the inspection period can be extended to 2-3 months.

As a rule, documents are submitted at the beginning of the calendar year, but this is not mandatory. You can contact the tax office directly after registering the apartment and receiving the necessary documents. However, for the convenience of making calculations, experts recommend submitting documents in the second half of January, immediately after the holidays.

Separately, it is necessary to consider the situation when, after purchasing an apartment, a sufficiently long time has passed during which the citizen has not applied for the transfer of compensation. Currently, the rule is that a person who purchased real estate after 2014 has the right to receive a tax deduction at any time. Even if 5 years pass, you will retain the right to transfer compensation. However, it is important to remember that in this case, only the last 3 years preceding the submission of the application will be taken into account in calculating the deduction amount.

Only funds already paid for taxes for the previous period are transferred to the personal account. If the amount of this compensation is less than the established amount, then you have the right to receive the remaining funds in future reporting periods. To do this, you will need to obtain a certificate (written notification) from the INS about the right to a tax deduction. This paper is provided to the accounting department of the enterprise where you work. Starting from the next billing month, your salary will be transferred without deduction of income tax from it.

If you are registered as an individual entrepreneur, then the corresponding calculations can be made by a hired accountant or you yourself. In this case, when filing a declaration in future periods, you will need to note that you have completed the deduction and attach a copy of the certificate from the INS.

What documents are needed?

To apply for a tax deduction you will need:

identification document;
declaration 3-NDFL and application for tax refund;
documents confirming your expenses;
documents confirming the paid income tax (certificate 2-NDFL).

You can find a detailed list of documents here: Documents for property tax deduction.

When do I need to submit documents and for what period can I get a tax refund?

You can return the money under the property deduction starting from the year in which you have in your hands:

payment documents confirming expenses incurred for the purchase of an apartment/house/plot;
documents confirming the ownership of housing : an extract from the Unified State Register of Real Estate (certificate of registration of ownership) when purchasing an apartment under a sale and purchase agreement or an Acceptance and Transfer Certificate when purchasing housing under an equity participation agreement.

If you bought an apartment in the past and did not apply for the deduction immediately, you can do it now (there are no restrictions on the timing of receiving the deduction). The only thing is that you can return income tax for no more than the last three years. For example, if you bought an apartment in 2021, and decided to apply for a deduction in 2021, you will be able to get your tax back for 2021, 2021 and 2021 (detailed information about when and for which years you can get your tax back can be found in our article : When and for what years should I apply for a property deduction when buying a home?

The entire balance of the property deduction is carried over to the next year. That is, you can return personal income tax over several years until you exhaust the entire amount (see Amount of tax deduction).

The entire procedure for obtaining a deduction usually takes from two to four months (most of the time is spent checking your documents by the tax office).

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.

When selling

Not only citizens purchasing real estate have the right to obtain a tax deduction. This opportunity is also available to those who sell it. In accordance with current legislation, a citizen, after selling real estate, must pay 13% tax on the profit received.

If you use the right to a tax deduction, you can significantly reduce your expenses. Often, the original cost of the real estate item at which the seller purchased it is subtracted from the total amount received after a purchase and sale transaction. In some cases, it is possible to reduce the amount from which income tax will be deducted by 1 million rubles. Often this method of calculation is used when the original cost of the property was less than the specified amount.

For example, if the current owner purchased an apartment for 700 thousand rubles and sold it for 1.2 million rubles, then it will be much more profitable for him to use the second calculation option. Then 1 million rubles of tax deduction is subtracted from the current value. As a result, instead of personal income tax on 500 thousand rubles, the seller will pay only on 200 thousand rubles. The final amount of income tax will be 26 thousand rubles.

Previously, citizens who owned real estate for more than 3 years could use the right of deduction. However, recent changes in the current legislation have introduced a number of amendments that have tightened the rules for using the deduction for real estate sellers:

starting from 2021, the property tenure period has been increased from 3 to 5 years;
The procedure for calculating the value of property being sold has been changed.

Attention! According to the new rules, when calculating the tax base, it is not the market price that is taken into account, but the cadastral value of the apartment.

Tax deduction is an excellent opportunity for working citizens to reduce their expenses when buying and selling real estate. The main thing is to make the correct calculations and collect the necessary documents.