Tax deduction when buying a car: how to get 13% back when buying a car

Russian tax legislation allows you to obtain property tax deductions in various situations.

For example, almost everyone has heard about the deduction that can be obtained when purchasing an apartment or residential building. Also, most drivers know that you can receive a property deduction in the amount of 250,000 rubles if you sell a car. This deduction is discussed in more detail in the article “Car Sales Tax.”

At the same time, the essence of the tax deduction in any case comes down to the fact that a person is exempt from personal income tax (personal income tax in the amount of 13%), which he paid previously or must pay in the future.

So, well-known deductions are provided when buying an apartment and when selling a car. And in this regard, many drivers have a question about whether it is possible to return taxes when buying a car ? This will be discussed below.

For example, Andrey bought a new car at a car dealership worth 1,000,000 rubles. He wants to receive a deduction of 13% of the purchase price, that is, 130,000 rubles. Let's see if this is possible.

Is it possible to get a tax refund when buying a car?

Do I need to pay tax when buying a car? The purchase of a vehicle is a civil purchase and sale transaction, regardless of the status of the parties. When purchasing a car, no tax is charged from citizens, and all expenses of the parties will be associated only with payment of the duty when registering the vehicle.

After ownership arises, transport tax will be charged annually. Its exact size is approved annually by regional regulations and depends on the year of manufacture of the machine and engine power.

Is it possible to get a tax refund on a car purchase, since even a partial refund significantly affects the family’s income? First of all, let's look at what is meant by a tax refund. The system of property deductions in the Russian Federation allows you to return part of the personal income tax previously withheld from wages or other income of citizens.

The most common type of deduction is personal income tax reimbursement when purchasing real estate, but a similar benefit can be used in a number of other cases (when paying for education, certain types of medical services). A tax refund when purchasing a car in 2021 is not possible for the following reasons:

• in the Tax Code of the Russian Federation or other regulations there is no mention of property deductions when purchasing vehicles;
• the purchase of any property entails expenses for the acquirer, which makes taxation pointless;
• Only the seller will be able to return personal income tax after the transaction, for whom the deduction amount will be 250 thousand rubles. or in the amount of expenses previously incurred for the purchase of a car.

Note!

Tax on car purchases is not withheld from enterprises either. Therefore, legal entities cannot return it, but they have the right to take into account certain types of expenses when calculating income tax.

Given these rules, when planning to purchase a vehicle, you should not count on government help.

Basic options for saving

1. If the vehicle was sold for an amount of up to 250 thousand rubles, then the profit received is not subject to taxation - despite the fact that the seller made a profit. But if you owned the car for less than 3 years, you will still need to send a declaration to the Federal Tax Service. At the same time, it is not recommended to deliberately underestimate the cost of a car - Federal Tax Service employees will detect this and bring the violator to justice.

2. If the seller has owned the car for more than 3 years, he does not need to pay tax.

3. If the car was owned for less than 3 years, you will need to send a 3-NDFL declaration indicating the sale price. If there are documents that confirm the sale of a car is more expensive than its purchase, then the seller pays 13% personal income tax on the difference.

Offsetting as a way to save

If in the past year a person sold a car and bought property, then you can use mutual deduction - mutual coverage of one tax by the second. If you purchased housing for 1.5 million rubles and sold a car for the same amount, you must pay 13% from the sale of the car, and then return it as a deduction from the purchased apartment.

You can use the mutual deduction only 1 time.

How to get your income tax back on a car purchase

There is no tax refund when purchasing a car in 2021. However, there are no legislative initiatives on this issue for the upcoming tax periods. This means that you should not count on personal income tax reimbursement in the coming years. However, the possibility of introducing a special tax on purchased vehicles is also not provided for by the legislator.

Who can return 13%

A tax refund when purchasing a car is not possible, but the seller has the right to take advantage of a similar benefit. To do this, the following conditions must be met:

• if the car was owned for more than 3 years, the seller will not have to pay personal income tax;
• if the car was owned for less than 3 years, 250 thousand rubles can be deducted from the income received. or the entire amount of previously incurred costs for the purchase of a vehicle;
• To declare income and receive benefits, the seller is required to submit a 3-NDFL declaration form to the tax service.

Note!

A deduction for the car seller allows you to avoid taxation or reduce the tax base. However, it will not be possible to return personal income tax withheld from your salary in this way.

13% refund on car purchase

No one will be able to return the tax for the purchase of a car, including citizens who have benefits and advantages for other types of tax obligations. Purchase costs cannot be combined with family expenses for purchasing real estate or paying for education. Therefore, it is impossible to include the price of a car in other types of expenses in order to receive a reverse 13% personal income tax.

Questionable method

Quite often, in order to avoid the need to pay personal income tax to the treasury, former owners of vehicles enter a deliberately reduced price into the contract. Nevertheless, regulatory organizations closely monitor such transactions, and if they suddenly see that you sold a foreign car for less than 250,000, then it is unlikely that they will be convinced of the veracity of the terms of the agreement.

A home-grown schemer caught in the act will face severe punishment. So, he will be forced to:

• pay a hefty fine imposed on tax evaders;
• pay personal income tax in full;
• compensate legal costs.

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What to do if the car purchase documents have not been preserved

Although you cannot get income tax back for buying a car, you need to be careful about filling out and keeping the transaction documents safe. In addition to registering the car, they may be required to resolve possible disputes with the seller, as well as to obtain a deduction for a subsequent sale.

Loss or destruction of documents will have the following consequences:

• when contacting the traffic police, you will receive a legal refusal to register the car, since the fact of transfer of ownership will not be confirmed;
• claims cannot be made against the seller if significant defects are identified in the car;
• Without purchase documents, you will not be able to take these expenses into account when subsequently selling and calculating personal income tax.

Note!

If the period of ownership of the car exceeds 3 years, documents on expenses incurred will not be required. However, having a car purchase agreement will help you avoid problems during the sale.

Payment without receipt

Some people have had such trouble that they were not sent a receipt for payment. The problem is not always the work of tax officials. It is also quite possible that the letter was lost in the mail or it could have been delivered to the wrong address.

If it’s time to pay the tax and you still don’t have a receipt, then you shouldn’t wait. She probably won’t come again, and the person risks going overdue. As is known, without notification of the amount, a person has no right to pay. But this does not mean that nothing can be done now.

Do I need to submit a declaration when buying a car?

The law only provides for the declaration of income from the sale of real estate, vehicles or other property. A declaration is not submitted for the costs of purchasing a car. However, when filing tax returns, legal entities need to take into account almost all expenses when calculating the taxable base.

In the absence of an obligation to file a declaration, the collection of any penalties is not allowed. The only case where liability arises for false declaration of expenses is in the civil service regime. Officials included in the federal register are required to annually declare income, personal property, as well as expenses for the purchase of real estate, transport and other expensive assets.

Who is entitled to a 13% interest refund?

A bill is being considered in the State Duma that proposes introducing a new personal income tax deduction in the amount of 13% of the amount of expenses for purchasing a car. It is assumed that the deduction will be available to citizens who purchased a new (not used) Russian-made passenger car for family or personal needs. The total amount of expenses is strictly up to 1 million rubles. The largest planned deduction amount is 100 thousand rubles.

If the bill is adopted, then taxpayers will be able to return 13 thousand rubles from the budget.

The following rule was also established: if a person took advantage of such a deduction, he will be able to receive it again in the future, but at least 5 years must pass from the date of the previous application for a refund.

This law is attractive to the state in the sense that it will encourage citizens to purchase domestic cars, developing the Russian automobile industry.

List of documents for obtaining a tax deduction

Only the seller can use the tax deduction after a car transaction. If the period of ownership of the car does not exceed 3 years, you need to submit to the Federal Tax Service:

• declaration 3-NDFL;
• contract of sale;
• a receipt, payment order or other document confirming receipt of money from the buyer;
• documents for a previously completed purchase transaction, if actual expenses incurred are used for deduction.

Note!

To receive a deduction in the fixed amount of 250 thousand rubles, you do not have to submit purchase documents.

The declaration and other documents are submitted to the Federal Tax Service no later than April 30 following the reporting year.

How is the deduction amount calculated?

If the taxpayer purchased an apartment, a private house, paid for construction or took out a loan for these purchases - up to 2 million rubles, then an amount of up to 260 thousand (13% of the purchase price) is returned.

Such calculations do not work with a car, since there is no deduction for the vehicle.

How to get 13 percent back from buying an apartment

Calculation example

If a person sold a car for 300 thousand rubles, but the certificates and papers confirming the purchase were lost, then it is possible to use a deduction of 250 thousand rubles and pay 13% on 50 thousand (300 – 250 = 50). If there is documentation (for example, the car was purchased for 280 thousand), then 13% is calculated from 20 thousand rubles (300 – 280 = 20).

Summary

Tax on car purchases in 2021 is not withheld from citizens and organizations. Also, the buyer will not be able to claim a personal income tax refund, since there are no deductions for the purchase of vehicles. Only the seller can take advantage of the deduction if the period of ownership of the car does not exceed 3 years.

Although the law does not provide for a tax refund when purchasing a car in 2021, other difficulties may arise when completing the transaction. To resolve any problems, use the services of our lawyers. You can get an explanation of the law and advice by phone or through the feedback form.

Payment through State Services

As already mentioned, transport tax can be paid via the Internet, and one of the most popular methods involves using a government services website. Most people are already personally familiar with this service, but those who see it for the first time will find it useful to familiarize themselves with information about its use.

First of all, you need to log in to the site. You may first have to register by providing your personal information. You will also need to document your identity in order to fully use the resource.

Upon entering your account, you will see the “Public Services” button. You will need to click on it, and after that you can go to the section with the list. There you need to select the appropriate one, and then click “Get a service”.

After this, you can make payment, for example, using a bank card. The payment is verified within 14 days, after which it is either accepted or rejected. If everything is legal, then a person should not worry, since everything will go well and he will be able to pay off the existing debt.

Legislation

You can find the answer in the Tax Code of the Russian Federation:

1. In paragraph 1 of Art. 220 of the Tax Code of the Russian Federation contains a list of property for which you can receive a deduction.
2. If we rely on subparagraph 3 of paragraph 1 of Article 220 of the Tax Code and letter of the Ministry of Finance of the Russian Federation dated May 21, 2010 No. 03-04-05/9-277, there is no information about vehicles in this list.
3. Letter No. 03-07-14/45360 of the Ministry of Finance of the Russian Federation dated July 17, 2017 regulates the procedure for VAT refund to legal entities.

In 2015, deputies of the LDPR party prepared a bill to include transport in the list of property for which income tax can be refunded. But at the same time a certain list of criteria was compiled:

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1. The car must be new.
2. The car was produced by a domestic plant or it is a Russian-assembled foreign car.
3. The amount of payments cannot exceed 500 thousand rubles.
4. Reimbursement is a one-time event.

A list of brands and models purchased by a citizen for the first time at a car dealership was compiled. Thus, the creators of the bill wanted to stimulate consumers to buy domestic cars for the development of the Russian automobile industry.

However, the amendment has not yet been adopted. If it is reviewed and approved in 2021, it means that payments will begin to be made from this period, but for now there are no changes in the law.

For reference! According to the law, you cannot get a deduction for buying a car, you can only get it for selling it.

Responsibility for breaking the law

Sometimes, in an attempt to save or evade taxes, citizens do not comply with applicable rules. If errors are detected, penalties will be applied to the violator.

There are two main groups of violations:

1. Lack of 3-NDFL declaration.
2. Understatement of the transaction amount in the contract.

In the first case, depending on the receipt or non-receipt of profit, the citizen will be held accountable under Article 119 of the Tax Code of the Russian Federation. The second situation will be considered as tax evasion and punishable under Art. 122 of the Tax Code of the Russian Federation. The penalty for both articles is payment of a fine.

The provisions of Russian legislation do not provide for a tax deduction when purchasing a car, either with your own money or with credit. However, if it is sold, the citizen may be exempt from paying personal income tax or given a benefit. If attempts to use illegal methods of saving are detected, the perpetrator will be held accountable.

Deadlines

Returning personal income tax is a lengthy procedure. After submitting documents for deductions, the tax office conducts a painstaking audit within three months. If, based on its results, a decision is made to return the overpaid amounts, the funds are transferred to the specified account within a month. Thus, if the documents are drawn up correctly, the procedure takes at least 4 months. Even if you receive a refusal, you should not be upset. The taxpayer has three years to collect and complete the paperwork.