Refund of personal income tax when purchasing an apartment

Tax when buying an apartment from relatives

There are two ways to become the owner of a close relative’s apartment during his lifetime:

• buy - and lose the right to a tax deduction;
• accept as a gift and take advantage of the tax benefit that exempts you from paying personal income tax.

In the latter case, the rules of civil and tax law provide relatives in the descending and ascending lines with additional preferences. Thus, property received free of charge must be declared. In this case, the donor bears the costs, and the recipient receives, from the point of view of the Tax Code of the Russian Federation, income taxed at the standard rate for residents - 13%.

However, parents of parents, parents themselves, spouses, children, grandchildren and siblings entering into a gift transaction are exempt from having to pay tax.
Thus, a father-in-law who gave his son and daughter-in-law ½ of an apartment each exempts the former from additional transfers to the budget. Whereas the daughter-in-law is obliged to report for the gift in the next calendar year and contribute 13% (or 30% for non-residents) of the cost of the object, calculated independently, to the treasury. Attention! Refusal to receive a tax deduction from relatives is associated with the possibility of influence of family relationships on the value of the object. However, even if the apartment is sold by the father of his daughter at the average market price, the Federal Tax Service will issue a decision on refusal and will not reimburse personal income tax.

Who can apply for a tax deduction?

When applying for a tax deduction when purchasing an apartment from a relative, the following conditions must be met:

• the buyer is a resident of the Russian Federation;
• his income is officially confirmed;
• the employer regularly contributes 13% of his earnings to the budget;
• personal or borrowed funds were used for the calculation;
• the relative-seller is not included in the exclusion circle.

Peculiarity! The amount of government subsidies used will be deducted from the cost of the property under the contract: maternity capital funds, federal programs of assistance in purchasing housing for certain categories, etc.

Who is not entitled to a property refund?

Tax benefits will not be provided to the buyer of real estate in the following cases:

• he was absent from Russia for a long time (more than six months);
• he does not have an officially confirmed source of income;
• the employer did not contribute to the budget or used a different rate when withholding personal income tax;
• payment for the contract was made entirely with funds from the state budget or the employer;
• There is a close family relationship between him and the seller.

Interesting! The Federal Tax Service may refuse to deduct if the parties to the agreement are, for example, a mother-in-law and a son-in-law. The property becomes the joint property of the spouses, one of whom is a close relative of the seller. This can be avoided by concluding a prenuptial agreement that confirms the daughter’s renunciation of proprietary claims to the square meters purchased by her husband.

Can everyone count on a tax deduction when buying an apartment?

Purchasing an apartment or house is a very important step in the life of every person, requiring significant financial expenses, so a property deduction in this case comes in very handy and helps to somehow cover the gap in the budget. However, receiving a personal income tax refund is not an easy procedure, requiring a certain package of documents, as well as knowledge of the conditions and procedure for receipt provided for by the Tax Code of the Russian Federation.

Without experience, skills, as well as a clear algorithm of actions, you can spend a very long time with the registration - so it is better to initially contact specialists so that the personal income tax refund when buying an apartment is completed as quickly as possible and without nerves.

It is worth remembering that after one year has passed after purchasing a home (i.e. after one tax period), the taxpayer can return an amount not exceeding the total amount of taxes he paid for the same tax period. If an individual has paid a tax amount in one year that is less than what is owed to him for the refund for the purchase of real estate, then the balance of the personal income tax refund is carried over to the next tax period, that is, to the next year.

A taxpayer can count on a tax deduction for the purchase of an apartment only if the property was purchased with his own funds from strangers. That is, if an individual bought housing from relatives, or the housing was provided as ownership by an employer, then a personal income tax refund when purchasing an apartment is impossible.

So, in order to receive a tax deduction for the purchase of an apartment, you must take into account all the rules listed above.

It should be noted that you can receive a personal income tax refund when purchasing an apartment more than once. If a citizen received a deduction and sold the property, he has the right to a refund when buying another apartment, etc.

But there is a limitation - a taxpayer during his lifetime can make a personal income tax refund when purchasing an apartment for a total amount of no more than two million rubles for the purchase of real estate and no more than three million for paying the interest rate on the loan. This is the law prescribed in the Tax Code of the Russian Federation. Those. Each person can return the taxes he has paid in the amount of 260,000 rubles (13% of 2,000,000 rubles) over his entire life.

To make everything clear and understandable, we give a clear example of calculating the return:

1. A citizen purchased an apartment for 1,000,000 rubles
2. He has the right to a tax deduction for the purchase of an apartment - 13% of 1,000,000 is 130,000 rubles.
3. A citizen receives an official salary subject to personal income tax - 10,000 rubles per month / 120,000 per year. Therefore, in one tax year he can return 13% of 120,000 rubles - 15,600 rubles. The citizen will receive the rest in subsequent tax periods.
4. A citizen will receive a full tax deduction for the purchase of an apartment after 8.5 years. Moreover, he can apply for a personal income tax refund when purchasing an apartment either annually or less frequently.

If an individual buys an apartment in an apartment building under construction, then he also has the right to a deduction. Moreover, a refund can be made for the purchase of building materials, re-issuance of documents, etc. In this case, the real estate purchase and sale agreement must contain a note about the need for repair and finishing work in the purchased property.

If the apartment was purchased with a mortgage, then the return on mortgage interest is made separately from the property deduction for the purchase of the apartment. Those. even if a citizen has already received the maximum 260,000 rubles in return, he has the right to count on a deduction for mortgage interest.

How do they know that the home has been sold by their parents?

The Federal Tax Service does not have a special methodology for determining the degree of relationship between the seller and buyer of real estate. The inspector makes a decision based on the totality of the collected data:

• comparison of names and places of registration;
• request to the civil registry office;
• written confirmation or refutation from the buyer, etc.

Concealing the fact of purchasing an apartment from a relative in order to obtain a tax deduction is quite simple. However, this is an illegal act and is fraught with charges of illegal enrichment with all the ensuing consequences.

One of the legal ways to get around the obstacle is to use other transaction formats. Thus, the ban is imposed only on sales contracts. The assignment of rights of claim does not fall under this rule. This means that having purchased an apartment under a shared participation agreement, the father has the right to assign it to his son. The latter will be able to legally claim a tax deduction after signing the transfer and acceptance certificate.

How will the tax authorities discover that housing was purchased from relatives?

The most frequently asked question among citizens who want to receive a tax deduction when purchasing real estate from relatives is the question of how the tax office can find out that the seller and buyer are related. The tax authorities do not yet have unambiguous and guaranteed methods for detecting this fact. Tax inspectors compare various data (for example, last names, places of registration), check data against the databases of civil registration authorities, and may also ask the buyer-taxpayer to write a written confirmation that he is not related to the seller.

Read more: Can debt collectors listen to a cell phone?

Although sometimes citizens manage to hide the fact of kinship from the tax office and receive a deduction, it should be noted that this is not legal, and if the hidden fact is subsequently discovered, it will be necessary to return the deduction in full.

Deal between relatives before 2012 and after

Until 2012, tax legislation was based on the rules for determining kinship and property, enshrined in related branches of law by directive documents. Among them:

• Family Code of the Russian Federation;
• Civil Code of the Russian Federation;
• All-Russian classifier of information about the population.

The circle of persons from whom the purchase of an apartment automatically deprived the right to a tax deduction was comprehensive and included all possible degrees of kinship. Grandchildren, grandmothers, great-grandmothers, nieces, aunts, cousins, stepfathers, stepchildren, in-laws were all subject to the exclusion rule. Concluding a deal with one of them was deprived of the tax benefit.

For transactions concluded since the beginning of 2012, the provisions of Article 105.1 of the Tax Code of the Russian Federation apply. The list of interdependent persons is limited to the following relatives:

• spouses;
• parents and adoptive parents;
• children (natural and adopted);
• brothers and sisters;
• guardians, trustees and their wards.

Important! The court may expand this list based on a claim from the tax service. However, in practice, the Federal Tax Service does not look for additional reasons for refusing a deduction on this basis - a transaction between related parties.

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I have already covered this topic; during this period, there were no significant changes in legislation regarding this type of transaction. However, you still have questions. Therefore, I decided to tell you again about transactions for purchasing real estate from relatives. And as usual, I will answer your questions.

So, let me remind you that if you purchase an apartment, house, or room from your relatives, then you do not have the right to receive a property deduction. This restriction is enshrined in Part 1, Clause 2 of Art. 220 Tax Code of the Russian Federation.

Such relatives include (in accordance with Article 105.1 of the Tax Code of the Russian Federation): spouses, parents, children, full and half brothers and sisters, guardian and ward. That is, these are your close relatives. As for the persons specified in Article 20 of the Tax Code of the Russian Federation, which also mentions the categories of interdependent persons (relatives by kinship and affinity), the deduction for these persons was not provided for transactions completed before 01/01/2012. And from the beginning of 2012, relatives who entered into transactions after the specified date will be able to receive a deduction.

Let's say you bought an apartment from your nephew. In this case, you are entitled to a property deduction, since in accordance with family law you are not close relatives (aunt, uncle and nephew). About this Letter of the Federal Tax Service for Moscow dated August 27, 2010 No. 20-14/4/ [email protected]

But if the father buys an apartment from his son, then the father will not be able to receive the deduction (Letter of the Federal Tax Service for Moscow dated August 19, 2010 No. 20-14/4/087705.

Or another possible situation. Your spouse purchases the house from your mother. In this case, he has no right to receive a deduction, since there are property relations between them. “Relationships of property” according to the family code are relationships arising in connection with the marriage between a spouse and relatives of the other spouse, as well as between relatives of spouses (Letter of the Federal Tax Service for Moscow dated 06/09/2010 No. 20-14/4/ [email protected] ). And if you make such a transaction in 2012, you will be able to receive a deduction (clause 6 of Article 4 of the Federal Law of July 18, 2011 N 227-FZ).

The mother-in-law and daughter-in-law entered into a contract for the sale and purchase of a room. The mother-in-law will not receive a deduction, since there is a property relationship between them (Letter of the Ministry of Finance of the Russian Federation dated 08/04/2011 No. 03-02-08/86). And when concluding an agreement in 2012, the mother-in-law will receive a deduction (clause 6 of Article 4 of the Federal Law of July 18, 2011 N 227-FZ).

For example, a transaction for the sale of a house with a plot of land was concluded between half-brothers before 2012. In this case, it is possible to receive a deduction. Since these persons are not close relatives according to Art. 14 of the Family Code of the Russian Federation, and recognition of them as close relatives in accordance with Art. 1144, 1145 of the Civil Code of the Russian Federation is possible only if the tax service establishes this fact in court.

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Tax deduction amount

The amount of the tax deduction does not depend on the degree of relationship and relationship between the seller and the buyer, but is determined by the costs incurred:

• for the purchase of living space – no more than 2 million rubles. own or credit funds;
• for finishing of premises - if the contract expressly states that the object is transferred to the new owner without finishing;
• to pay off interest on the loan - no more than 3 million rubles. upon payments made.

The above restrictions apply to legal relations arising from 2014. Previously, the amount of tax deduction for credit interest was not limited. For transactions completed before 2008, the maximum benefit amount was 1 million rubles.

Spouses who purchase real estate as joint property without allocating shares can double their personal income tax refund. In this case, each of them can claim the maximum deduction in relation to the same property.

Property deduction when purchasing housing from relatives after 2012

For all transactions concluded starting from January 1, 2012, interdependent persons from whom a deduction cannot be obtained when purchasing housing are determined in accordance with Art. 105.1 Tax Code of the Russian Federation.

In paragraph 2 of Article 105.1, the list of interdependent relatives is fully specified. They are recognized as: spouse, parents (including adoptive parents), children (including adopted children), full and half brothers and sisters, guardian (trustee) and ward . When purchasing housing from these relatives, you cannot receive a property tax deduction (Letter of the Ministry of Finance of Russia dated April 26, 2017 No. 03-04-05/25014). When purchasing from any other relatives, there are no restrictions on tax deductions.

Who is not entitled to

Exceptions are described in detail in the Tax Code of the Russian Federation:

1. The apartment was sold before January 1, 2014, the buyer managed to take a tax break.
2. The apartment was sold later than January 1, 2014, however, the benefit has already been reimbursed.
3. The apartment was purchased and the seller was a relative.
4. A citizen is officially considered unemployed and does not pay mandatory income tax.
5. The apartment was purchased, the employer helped in the transaction.
6. The apartment was purchased; the citizen spent maternity capital (as well as other subsidies) on the purchase.

It turns out that if the property was sold by family members or other close relatives, then it is almost impossible to return the deduction.