The Tax Code states that tax deductions are not provided when purchasing an apartment from relatives. Every buyer who has purchased a primary or secondary home can receive it, but not a close relative of the seller.
When registering a deed of gift or inheritance for the real estate of close relatives, the owner receives the right to benefits in paying taxes and paying for notary services. In this case, the agreement records the existence of a direct relationship and attaches documents confirming family ties. Considering the results of donation and sale, we can conclude that they differ slightly; it is difficult to give preference to any of them without certain knowledge.
Registration of a deed of gift entails additional financial expenses, unlike a purchase and sale agreement, which can be drawn up, printed and signed without the help of lawyers. A deed of gift can also be issued without a notary, because in the case of a gift to a close relative, there is no point in paying for the security guarantee that a notary can provide. After persons enter into inheritance rights, litigation may arise that contradict the will of the deceased; therefore, many prefer to use other transactions for the registration of an apartment. The main difference between different types of transactions is the payment of taxes.
Rules for obtaining a tax deduction
Unlike a deed of gift, which gives the right to cancel the 13% tax for close relatives, there are no such advantages when selling a home. The tax is also levied on owners who sell residential premises that they have owned for less than 3 years. When completing such transactions, neither the seller nor the buyer are entitled to benefits, and they are also denied the right to a tax deduction.
Based on the tax code and other regulations, applicants for the deduction are buyers who are not related to the seller . Previously, all buyers who were related even by distant family ties could not receive a deduction. However, in 2012, the legislation was slightly modified, narrowing the list of those to whom payments are not intended. Citizens who have made a transaction with close relatives are not entitled to the deduction.
Purchase procedure for a family member
A transaction between close relatives has the following features:
- trusting relationships between participants free them from lengthy collection of documents;
- Payment for an apartment can be made in cash without using complex mechanisms (letter of credit, escrow, safe deposit box);
- you can agree on more favorable terms of payment for the apartment without transferring the housing as collateral to the seller;
- payment for notary services when certifying a contract will be less due to kinship.
A transaction based on trust does not involve an in-depth analysis of the apartment’s history. Relatives already know who lived in it and what requirements may arise in relation to this apartment. Accordingly, both the seller and the buyer bear less risk during registration.
Payment for housing is also based on the trust of the participants. This means that there is no need to use the services of an intermediary. This approach will help you save on all kinds of bank commissions and fees.
As a general rule, when paying for an apartment in installments, the seller retains the right of lien on the sold property until the last payment is made. In the case of a transaction between close people, you can come to an agreement on installment plans without registering a pledge.
Please note that all of the listed nuances are based on the personal relationships of the parties.
The only difference provided for by the regulatory rules is the calculation of payment for notary services.
So, if an apartment is sold to a spouse, parents, children, grandchildren:
| Transaction amount | Approximate tariff |
| up to 10,000,000 rub. inclusive | 4800 rub. + 0.2% of the contract price |
| over 10,000,000 rub. | RUB 24,800 + 0.1% of the price exceeding RUB 10,000,000, but not more than RUB 50,000. |
If the apartment is sold to other persons:
| up to 1,000,000 rub. | 4800 rub. + 0.4% of the transaction amount |
| from 1,000,001 rub. up to 10,000,000 rub. | 8800 rub. + 0.2% of the transaction amount exceeding RUB 1,000,000 |
| over 10,000,000 rub. | RUB 26,800 + 0.1% of the transaction amount exceeding RUB 10,000,000, not more than RUB 100,000 |
Approximate rates are given, from which you can see the difference in the amount of payment. Remember that, as a general rule, notarization of purchase and sale agreements is not required.
There are no other legally established features of the transaction procedure through kinship. The same rules and requirements apply to registration as in the case of strangers:
- a purchase and sale agreement is drawn up;
- the transfer deed is signed;
- documents are submitted for registration;
- the apartment is paid for.
For tax purposes, it also does not matter to the seller to whom the apartment was sold. Sales tax is paid according to general rules.
The buyer does not receive the right to a tax deduction and will not be able to return personal income tax by purchasing a home from a close relative. Please take this into account when completing the transaction.
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What kind of family ties are deprived of the right to deduction?
Citizens who are to the seller are deprived of the right to a tax refund:
- legally married spouse;
- parents or guardians;
- a natural or adopted child;
- sibling or half brother or sister.
When drawing up a contract for the purchase and sale of a house, apartment or other category of real estate with one of the listed relatives, you must be aware that a tax deduction will not be made.
Often relatives purchase housing from each other for economic purposes:
- replace the gift agreement with a purchase and sale transaction, without seeking to enrich themselves;
- they can carry out such transactions with the aim of illegally obtaining profits at the expense of the state.
The presence of family ties between citizens is not a reason to change the terms of registration of various transactions between them, however, they are deprived of the opportunity to return a tax deduction even if a real financial turnover has been made.
Regardless of the category of housing being purchased (individual ownership or shared ownership), tax deductions are not paid when purchasing an apartment from parents or other direct relatives. This is explained by the fact that the outcome of the economic transaction does not meet real conditions; the seller often sells the property much lower than the market value.
No interdependence
As a general rule, a resident of the Russian Federation (a citizen of our state or a foreign national) can receive a personal income tax deduction when purchasing certain types of real estate. A tax deduction is an amount of money by which an individual’s income subject to income tax (NDFL) can be reduced.
When purchasing real estate, individuals are provided with a deduction in the amount of actual purchase costs. They include not only the cost of the property, but also interest on mortgages and loans received for the purpose of its acquisition. The law limits the maximum deduction amount to two million rubles. Property deductions for the purchase of housing are provided only once in a lifetime.
Regarding the purchase of an apartment from close relatives, a property deduction can only be obtained if there is no interdependence between the parties to the transaction. Let us recall the signs of interdependence. In accordance with the Tax Code, such persons include (subclause 11, clause 2, article 105.1 of the Tax Code of the Russian Federation):
- spouses;
- parents, including adoptive ones;
- children, including adopted children;
- brothers and sisters (full and half-blood);
- guardians (trustees);
- wards.
Changes in legislation
Previously, even indirect relatives could not obtain the right to a property deduction, for example, if a transaction was concluded between an uncle and nephew, between cousins, etc. The turning point came in 2012, when the circle of persons eligible for deprivation of the property deduction was significantly narrowed to direct family ties. Today, persons who are indirectly related and have entered into a transaction with each other can receive a property tax deduction.
When concluding transactions between close relatives, it does not matter whether real money turnover occurs or not, the right to deduction is lost, but it can be achieved. To do this, you need to draw up a claim and send it to the court. A positive court decision will be an incentive to withhold taxes in full in accordance with the cost of the purchased home and the income declaration provided by the buyer.
Tax deductions are not available to persons who purchase an apartment that has been owned for less than 3 years.
To achieve the right to a tax refund, direct relatives should draw up a sales contract in a slightly different way. To do this, you can draw up an assignment agreement for the sale of any type of housing. In this case, the tax is returned to all buyers, regardless of their relationship with the sellers.
Features of tax deduction payment
It must be taken into account that the law provides for the powers of the judiciary to make it possible to recognize certain persons as interdependent.
Moreover, it is not at all necessary for such persons to be related to each other. For this purpose, it will be sufficient to have a circumstance that can indicate that the result of economic activity is directly under the influence and dependence of specific individuals on each other. First of all, the court pays attention to the deviation in market value, so that it is possible to receive an inflated amount of property deduction for the purchased object. In other words, it refers to a direct conspiracy that has a selfish goal. Or persons can agree in writing that the former owner can, after transferring the real estate into someone else's ownership, use such property at his own discretion.
Registration in Rosreestr
The transfer of the right to an apartment to a new owner requires mandatory registration in the Unified State Register of Real Estate. This requires:
- Collect documents: 3 purchase and sale agreements, 3 deeds of transfer and papers according to the list above.
- Approach an appointment at “My Documents”: the parties come in person or send their representatives by notarized power of attorney. It is better to make an appointment at the MFC in advance, since the appointment requires at least 30-40 minutes of free time.
- During the appointment, the specialist will prepare an application and accept documents according to the inventory. Each party will receive its own copy of the inventory, from which it will be possible to obtain the result later.
- After the registration period has expired (7-14 days), come up with an inventory and receive an extract from the Unified State Register of Real Estate, an agreement and an act with registration marks.
In some regions, filing an application for registration electronically has been implemented.
From the moment of registration, the buyer enters into the rights to dispose of the housing. The holding period for calculating the annual property tax begins on this day. For example, if the contract date is December 2, 2016, and the registration date is January 25. 2020, then the property tax will come only in 2020 for the previous year.
Real estate transactions between close relatives
Russian legislation does not provide a uniform definition of the concept of “close relatives”. In most legislative acts in which it is used, there is a reservation that the term is used in relation to this act specifically. But, if we give a general description, then “close relatives” mean parents, children, adoptive parents, adopted children, siblings, grandparents, grandchildren, spouse.
Transactions, as actions of citizens aimed at establishing, changing or terminating civil rights and obligations, can be made between close relatives according to the general rules provided for by the Civil Code of the Russian Federation. This means that close relatives can give, buy, sell, rent real estate, transfer it by inheritance, enter into rental agreements and other agreements. The legislation defines only the specifics of some transactions.
There are several ways in which you can transfer real estate to close relatives: purchase and sale, donation and rent.
- Purchase and sale of real estate. Quite often, in order to transfer property, relatives enter into a purchase and sale agreement. The main advantage of buying and selling is that the property is transferred to the new owner immediately, without any serious time costs or paperwork. The disadvantages mainly relate to taxation.
- Donation of real estate to relatives. Any property, including real estate, can be donated. For this purpose, a corresponding agreement is concluded in writing. According to lawyers, transferring real estate under a gift agreement is the most profitable option for relatives.
- Rent of real estate between relatives. Most experts believe that in the near future the most popular method of transferring property between relatives will be rent. More precisely, a special case of annuity is lifelong maintenance with dependents. Under such an agreement, the buyer of real estate undertakes to support the seller for the rest of his life, and the former owner retains the right to lifelong residence in the apartment.
I believe that in order to find out exactly which method to choose and what documents are needed for this, you should seek a face-to-face consultation with lawyers involved in real estate issues, or directly with the realtors themselves, and tell them about the specifics of your case. Good luck!
Sources:
https://www.assessor.ru/forum/index.php?t=865
https://www.altreg.ru/state_registration/immovables/articles/1175/
Possible problems with a real estate contract drawn up between relatives
The main risk of the transaction under consideration is the difficulty of challenging it. In fact, it can be terminated only by court, although arbitration practice shows a low probability of such an outcome. Therefore, before deciding to donate property, it is advisable to weigh the pros and cons.
If no ideological obstacles are found, we proceed to drawing up a contract for donating real estate to a close relative. There are two main requirements for registering a deed of gift.
The first is the presence in the real estate donation agreement, which is drawn up between relatives, all the required details:
- date and place of imprisonment;
- information about the parties to the agreement;
- comprehensive information about the transferred object;
- conditions for the transfer of property - terms and procedure.
The second mandatory condition for the legal transfer of ownership is registration of the transaction with the Rosreestr authorities. This is another potential weak point of the deed of gift. Compliance with the official procedure is often hampered by elementary inaccuracies or typographical errors made when drawing up the agreement, which can lead to the suspension of registration actions. And legal errors lead to the registrar’s refusal to certify the transfer of rights.
The most important nuances that should be taken into account when drawing up the document are as follows:
- the donor does not receive any material benefit from the fact of making a gift (except perhaps moral satisfaction);
- the donor's rights to the transferred property must be properly formalized and registered;
- To make a gift, the consent of both parties is required (yes, the recipient must still agree to accept the gift!);
- it is possible to make a gift with a delay when the transfer of property occurs after a certain period;
- it is possible to include additional conditions in the text, the fulfillment of which becomes the basis for the agreement to enter into force (for example, the wedding of a son or the receipt of a higher education by a daughter).
Accordingly, intention alone is not enough; you will also need knowledge and practical skills.
Real estate donation agreement between close relatives - from 7 working days, 5,000 rubles.
| Name | Price for individuals persons | Term |
| Telephone consultation | 0 rub. | Individual |
| Detailed consultation with analysis of documents in the office (Skype, etc.) | from 5,000 rub. | 1 hour |
| Real estate donation agreement between close relatives | from 5,000 rub. | from 7 working days |
