Obtaining a tax deduction for children when purchasing an apartment/house/housing

Article updated: November 25, 2021
Author of the article Marina Afanasyeva Tax consultant with 4 years of experience.

Hello. In this article, I analyzed the situations of how and when parents have the right to receive a property tax deduction for their children when purchasing an apartment. Everything was supported by articles of the Tax Code and the official positions of the tax authorities.

Speaking below about parents, I mean those who are indicated on the child’s birth certificate as father or mother and are not deprived of parental rights - Art. 47 and art. 71 RF IC, art. 3 and art. 23 of the Federal Law of November 15, 1997 N 143-FZ. The same rules for receiving deductions apply to adoptive parents, foster parents or guardians of a child who have supporting documents in their hands - clause 6 of Art. 220 Tax Code of the Russian Federation.

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→Find out for free what deductions you are entitled to and how much money you can get back. VerniteNalog.ru specialists will tell you for free what deductions you are entitled to and calculate how much money you can get back.VerniteNalog.ru

First, you should understand the types of deductions and their limitations, then you will understand whether it makes sense for parents to receive a deduction for their child.

Tax deduction for home purchase by one parent and child

According to paragraph 6 of Art. 220 of the Tax Code of the Russian Federation , a parent who bought an apartment as a property with his minor child has the right to receive a property deduction not only for his share of the apartment, but also for the child’s share of the apartment.

This position is also supported by previous letters from the Ministry of Finance of Russia: dated 08/20/2013 N 03-04-05/33942, dated 02/17/2012 N 03-04-05/7-194, dated 07/19/2011 N 03-04-05/7- 523, dated July 19, 2011 N 03-04-05/7-521.

Example: Petrova A.A.
I bought an apartment worth 2 million rubles for myself and my 10-year-old son (1/2 share each). Despite the fact that half of the apartment is registered in the name of her son, Petrova has the right to receive a property deduction in the amount of the full cost of the apartment - 2 million rubles.

Sale of living space

The owner of the living space at the time of its sale receives taxable income. This applies to all owners, regardless of age. If parents sell real estate or shares owned by a child, they will have to file a declaration on his behalf. Here, too, the right to compensation appears, but the conditions will be different.

If you have owned housing in Moscow for less than 3 years, you can count on compensation for the tax payable at 13%. The refund amount can be confirmed by documents. If the base does not exceed 1 million rubles, the deduction is calculated from this amount. Several owners, when selling an apartment, will divide this money among themselves. If each share is sold under separate contracts, each owner is entitled to compensation of 1 million.

Now parents have the right to receive compensation when purchasing living space or its share in the name of a minor. The basic principles for providing benefits are the same as when applying for other citizens. You can receive a refund through the employer or the tax office.

Tax deduction for the purchase of housing by spouses and their child(ren)

If both spouses purchase an apartment/house/share and register it as joint property with minor children, the parents or one of them can receive a tax deduction for the children’s share.

Both spouses and one of them can increase their deduction at the expense of the child’s share when purchasing housing in common shared ownership . Spouses need to decide for themselves which of them and in what amount will increase their deduction due to the child’s share in the property.

Reason: letters of the Ministry of Finance of Russia dated 03/14/2013 N 03-04-05/7-223, dated 07/05/2012 N 03-04-05/5-845, dated 07/04/2012 N 03-04-05/5-841, dated 07/03/2012 N 03-04-05/5-822, dated 02/01/2012 N 03-04-05/5-101.

The law and letters from the Ministry of Finance do not contain instructions on how parents can distribute the child’s deduction. In this case, an application for the distribution of the child’s deduction between the spouses should be attached to the documents for the tax office. It would also be a good idea to seek advice from the tax office at your place of residence.

Example : Ivanov I.I., his wife Ivanova A.A. and their minor children purchased an apartment worth 4 million rubles in 2021 as common shared ownership (1/4 share of ownership for each). Each owner of a 1/4 share has the right to count on a deduction in the amount of 1 million rubles.

The couple decided that each of them would receive a deduction for the share of one of the children. The tax deduction for the purchase of an apartment will be distributed as follows: Ivanov I.I. – 2,000,000 rub. (for her share and the share of the first child), Ivanova A.A. – 2,000,000 rub. (for your share and the share of your second child);

A deduction for the child’s share can also be claimed when other relatives, in addition to the parents and their minor children, are participants in the common shared ownership of the purchased housing. The letter of the Ministry of Finance dated 06.06.2012 N 03-04-05/9-690 discusses the situation when an apartment was acquired in shared ownership of a child, his father and grandfather.

Example : Ivanov I.I., his brother Ivanov V.I. and a minor child purchased an apartment worth 1,800 thousand rubles in 2021 as common shared ownership (1/3 share of ownership for each).

Ivanov I.I. has the right to receive a deduction not only for his share, but also for the child’s share. The deduction will be distributed as follows: Ivanov I.I. – 1,200 thousand rubles. (for your share and the child’s share); Ivanov V.I. – 600,000 rub. (only for your share);

To receive a property deduction, parents do not require the child’s consent.

Features to Consider

First, there is the issue of income. Based on Letter of the Ministry of Finance of the Russian Federation No. 03-01-05/42052 dated July 18, 2021, it is stipulated that the lack of taxable income of the father or mother during the application period is not an obstacle to receiving a deduction; it can be received when an official job appears.

The second aspect of the problem is the possibility of receiving benefits again. Receiving a property deduction is carried out once; it is prohibited to claim it again in the child’s share. An exception is if the benefit is received in respect of one’s own part.

The speed of the procedure depends on where the application is submitted. Submitting a complete package of documents to the regional office of the Federal Tax Service will delay receiving the deduction for four months. This time is allocated for conducting a desk audit and transferring funds. The employer will carry out all work on the application no more than 30 days from the date of submission of the application.

On the one hand, this is an opportunity to get your own home at a young age, and not after decades of waiting in line, as was the case in the recent past. It is important that stabilizing the situation of young families with a separate apartment can significantly stimulate further growth in the birth rate and improve the demographic situation in the country.

Does a child lose the right to deduct if a parent received a property deduction for him?

Since the deduction for the costs of purchasing property can only be received once (from January 1, 2014 - no more than 2 million rubles during a lifetime), the relevant question is whether the child will lose the right to a property deduction in the future when purchasing their own home if the parent receives deduction for it. The regulatory authorities think not.

Due to the fact that a property deduction for a child’s home (or for a share of housing) is provided to the parents, and not to the child himself, the child does not lose the right to receive a property tax deduction in the future for the costs of purchasing another home .

This position is confirmed by a number of letters from the Ministry of Finance of Russia dated 09/03/2015 N 03-04-05/50743, dated 08/29/2014 N 03-04-05/43425, dated 07/04/2012 N 03-04-05/5-841, dated 10.04 .2012 N 03-04-05/7-478.

Design methods

A person can apply for a deduction for a child, as well as for himself, for the purchase of an apartment in 2 ways:

1. Through the Federal Tax Service . You can apply in person or send documents by mail. The advantage of this option is the ability to receive money immediately over a long period of time. But the application itself is considered for quite a long time + it takes time to transfer money to your current account. Typically the entire procedure takes about 90 days.
2. Through the employer . This option is suitable for those who do not want to wait and want to receive a salary without deducting personal income tax. But be prepared that first you will have to receive a notification from the Federal Tax Service confirming your right to the benefit. And you will have to issue it every year. But this approach requires fewer documents, and the paperwork will be simpler.

And don’t forget to double-check all documents before submitting to reduce the likelihood of refusal and speed up the process of applying for benefits. Otherwise, the papers may need to be collected and re-submitted in full, which will take extra time.

Read: Is it possible to get a tax deduction when exchanging an apartment?

Can a parent receive a deduction for a child if he has previously received a property deduction?

If a parent has already exhausted the property deduction for another property, then he will not be able to receive a deduction for the child. This is due to the limitation of the use of property deduction. Grounds: clause 11 of Art. 220 of the Tax Code of the Russian Federation, Letter of the Ministry of Finance of Russia dated March 16, 2015 N 03-04-05/13747.

However, if a parent wants to receive a deduction for a child on the same property that he himself received in part of his share (for example, he did not know about the possibility of receiving a deduction for a child), then he has the right to do so.

To do this, you should contact the tax authority again, submitting updated declarations with a recalculation of the deduction amount. Reason: letter of the Ministry of Finance of Russia dated 02.02.2012 N 03-04-05/9-109.

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.

Transfer order

Since the payment of real estate tax by minors is provided on an equal basis with adults, then if there are objects of taxation in the property, a personal receipt - calculation from the tax authority comes with the child indicated as a taxpayer. You can make payments to the budget in the following ways:

1. In cash at any banking organization. The presence of a receipt sent by the tax authority serves as an attachment to the payment made, extremely simplifying the formation of tax payment on the personal account of a specific taxpayer - a minor citizen.
2. Transfer of non-cash funds from a card account. Since the payer will be the account owner, to minimize problems it is necessary to clearly formulate the purpose of the payment:
   payment of property tax by minor owners;
3. detailed reflection of information about the payer (full name, tax identification number, birth certificate details).

How to pay tax for a child without a receipt? Individual data must be reflected in the payment document. As practice shows, if the TIN is not specified, then problems arise with crediting and posting to the required personal account.

On a formal basis, the parent’s personal card shows an overpayment or the tax amount is “hanging” in unidentified payments, and an arrears are recorded in the child’s personal account that requires clarification. The simplest way out of the situation is to issue an identification code for a minor who has no established age restrictions.

Who is entitled to this benefit?

Tax refunds are not available to all individuals. Tax legislation establishes a number of mandatory criteria that a person claiming a deduction must meet.

In addition to purchasing an apartment, these criteria are:

• presence of Russian citizenship;
• official employment.

Of course, when it comes to registering an apartment for children, there can be no talk of official employment. Only in exceptional cases do children aged 15–16 years have a place to work. But the main condition for obtaining a deduction is the age of majority. So such persons do not receive a deduction even if they have a job.

But this does not mean that they are not entitled to the deduction itself. Only it is registered in the name of the parents. Thus, the deduction is transferred to other persons.

This cannot be a basis for expanding the maximum limits for the provision of deductions. The law limits personal income tax deductions to 2 million rubles.

So if the parents have previously exhausted this limit, then the refund will be denied. When the refund has been used only partially, it is subsequently provided according to the remaining balance of the limit.

To summarize the above, it should be noted that recipients of personal income tax returns must meet the following basic criteria:

1. Be citizens of Russia and have a Russian passport with you. Foreigners and stateless persons are not entitled to a refund.
2. Buy an apartment in accordance with the procedure established by law, including a share in it or on the basis of common ownership.
3. Be a personal income tax payer. This tax is paid on wages and other income and is subject to withholding at the time of payment of wages or independent payment on other income.

Example

As a rule, benefits are received over more than one year. You can only return 13% of your annual earnings. The remaining amount is paid in the following periods. And if for any reason the applicant loses his job or becomes disabled, then he loses all preferences, since he does not remit personal income tax.

Documents for granting benefits can be sent in the following ways:

1. By mail.
2. Upon personal visit to the Federal Tax Service.
3. Through the “Personal Account” of the tax office.

Sending by postal order requires care and the correct postal address. A personal visit has a number of advantages, since you can ask questions, but at the same time waste time in queues. The most convenient way to submit the documentation package is via the Internet. All scans will need to be certified with a qualified digital signature.