Home / Real estate / Land / Purchase and sale
Back
Published: 12/17/2016
Reading time: 12 min
0
1259
It takes a lot of money to buy land. But Russians have the opportunity to return part of the amount spent. To do this, you need to apply for a property tax deduction.
Not all Russians can return the 13% personal income tax back, and this tax break does not apply to the purchase of every plot of land.
- What conditions must a taxpayer meet and what is needed to apply for a deduction? Features of obtaining a tax deduction when purchasing land without a house
- Features of obtaining a tax deduction when purchasing a plot with a house
- Features of obtaining a tax deduction when purchasing land with a mortgage
Under what conditions can a tax deduction be returned when purchasing a land plot?
Firstly, the law does not provide for a separate deduction for the purchase of one plot of land. A deduction is provided for the acquisition of a land plot or a share in it with the type of permitted use of individual housing construction (for individual housing construction) with the subsequent construction of a residential building. Or a deduction is provided for the purchase of a land plot with an already built residential building or a share in it.
Secondly, if you want to return the tax deduction, then you must be a resident of the Russian Federation and officially receive wages, on which the employer pays 13% personal income tax.
Property deduction can be used only if you receive an official salary and pay income tax at a rate of 13%. The actual income tax paid or accrued is subject to a refund.
If the owner of a land plot with a house or a share in it does not work or pays taxes as an individual entrepreneur using a simplified taxation system, it is impossible to return the tax using a property deduction, because it is not paid to the budget.
Thirdly, when purchasing land plots or a share(s) in them provided for individual housing construction, a property tax deduction is provided only after the taxpayer receives a certificate of ownership of a residential building.
The tax deduction may include actual expenses for new construction or the acquisition of a residential building or share(s) in it on the territory of the Russian Federation.
Namely:
- costs for the development of design and estimate documentation;
- expenses for the purchase of construction and finishing materials;
- expenses for the acquisition of a residential building or share(s) in it, including those not completed construction;
- expenses associated with construction work or services (completion of a residential building or share(s) in it that has not been completed) and finishing;
- costs of connecting to electricity, water and gas supply and sewerage networks or creating autonomous sources of electricity, water and gas supply and sewerage.
Acceptance for deduction of expenses for the completion and finishing of an acquired residential building or share(s) in them or the finishing of an acquired apartment, room or share(s) in them is possible if the agreement on the basis of which such acquisition was made provides for the acquisition of unfinished construction of a residential building, apartment, room (rights to an apartment, room) without finishing or share(s) in them.
Amount of compensation
Since the return of money for the purchase of a plot is not carried out in itself, its amount is regulated in the form of a return of funds for the purchase of housing, that is, a property deduction.
What is the amount of funds received?
According to the law, the maximum available amount for processing a refund is 13% of 2 million Russian rubles, that is, a total of 260 thousand rubles. Here we are talking about purchasing housing without using loans.
If the purchase involved a loan taken from a banking organization, the state returns 13% of 3 million rubles, that is, 390 thousand rubles, to the citizen to repay the interest paid on it.
Let's give an example. Larisa Sergeevna, a wealthy woman, bought a plot of land outside the city worth 3 million rubles and built a cottage on it, the price of which was 6 million. Despite the fact that the total amount spent was 9 million, Larisa Sergeevna is entitled to return only compensation for 2 million expenses, that is, 260 thousand, since the house was built and the land was purchased without using loans from credit institutions.
How much tax deduction will be returned when purchasing land?
The tax deduction is calculated from the actual costs incurred for the purchase of a land plot of individual housing construction and the construction of a dwelling or for the purchase of a land plot together with a built house. But there is a condition:
The tax deduction cannot exceed 2 million rubles. for one person. That is, the tax refund will be 260 tr. (2,000,000 – 13%).
But it is necessary to take into account that a tax refund for a calendar year can be made only in part of the personal income tax paid in that particular calendar year.
For example, in 2021 you purchased a plot of individual housing construction worth 550,000 rubles. Let's calculate that the amount to be refunded will be 71,500 rubles. But you earned 300,000 rubles in 2021 and the employer withheld only 39,000 rubles (personal income tax).
Therefore, in 2021, when you file a tax return, you can only return 39,000 rubles. The remaining amount of 32,500 (71,500 – 39,000 = 32,500) will be transferred to the next year 2021 if you work under the same conditions in 2021.
A pleasant fact is that if both family members (husband and wife) cost 4 million rubles to build or purchase a house along with a plot of land, then the tax deduction will be 520,000 rubles per family.
In addition, if you took out a mortgage loan to build or buy a house, you can return 13% of the interest paid. The maximum tax deduction will be 390,000 for each family member.
Not provided for by law
A citizen will not be able to realize the mentioned benefit:
- when the costs incurred for the development or purchase of a plot of land were not borne by him, but by employers or other persons;
- if maternity capital was used for the land plot;
- if expenses were covered from budget funds;
- if the purchase and sale of a land plot was carried out between spouses, parents, children, etc. (Article 20 of the Tax Code of the Russian Federation).
List of documents for tax refund
To receive a personal income tax refund when purchasing a land plot, the following documents are submitted through the tax office:
- tax return in form 3-NDFL (original),
- application for refund of overpaid tax (original),
- certificate 2-NDFL (original),
- agreement for the acquisition of a land plot/land plot and a residential building with annexes and additional agreements thereto (if concluded) (copy),
- documents confirming the taxpayer's ownership of a land plot or share(s) in it, and documents confirming ownership of a residential building or share(s) in it (copy),
- documents confirming payment (copy).
When receiving a tax deduction for the purchase of a land plot (its share), the child’s birth certificate is additionally submitted to the child’s ownership.
When purchasing a plot of land, spouses may need the following documents:
- marriage certificate (copy),
- agreement on the distribution of expenses for the purchase of a land plot (application for the distribution of deductions) between spouses (original).
Features of filling out an application
It is necessary to carefully fill out the application and submit the appropriate documents on expenses (checks, receipts, contracts), otherwise a reduction or refusal of personal income tax compensation may be possible.
The application must be submitted both in writing and electronically. When registering it, the following general rules are observed:
- Name of the organization (Federal Tax Service, its address).
- Full name, address of the applicant.
- A request for a deduction indicating the funds spent, account details for crediting money.
- List of applications.
- Date and signature of the applicant.
When purchasing land for individual housing construction without a house
The Tax Code does not provide for separate exemptions for land plots. In accordance with the letter of the Federal Tax Service dated December 10, 2012, the partial return of personal income tax is not associated with the purchase of land, but with the acquisition or construction of housing on it.
Therefore, the right to return when purchasing land for individual housing construction will arise from the moment of registration of the constructed residential building.
Tax Refund Options
There are two ways to receive a deduction when buying an apartment.
With the employer this year. In this case, you do not need to submit a declaration in Form 3-NDFL. The deduction will be provided based on notification. The tax office issues such a document upon application. This method of providing a deduction is that the employer reduces taxable income for the year by the deduction amount and ceases to withhold personal income tax. You receive it along with your salary. clause 8 art. 220 NK
According to the declaration next year. This option is suitable for returning personal income tax for previous periods or in the absence of an employment contract. You can file your return at any time during the next year or even later. The April 30 deadline for deductions does not apply: it must only be observed when declaring income. clause 7 art. 220 NK
Common mistakes
Error: The taxpayer claims to receive a tax deduction when purchasing a plot of land for a personal subsidiary plot (LPH).
Comment: The purchased land must have the status of a site for individual housing construction, otherwise the tax benefit will not be issued.
Error: The taxpayer submits an application for a tax deduction after purchasing a plot for individual housing construction, whereas the land was purchased with subsidies provided by the regional authorities.
Comment: To receive tax compensation when purchasing a building plot, you must pay for it with your own money. Subsidies, subsidies, and assistance from an employer make it impossible to receive a tax deduction.
How to submit documents to the tax office for a tax deduction
If the deduction is claimed for previous years, you need to submit a tax return in Form 3-NDFL. For each year there is a separate declaration. If two spouses claim a deduction for one apartment, then each submits a declaration for himself. A complete package of documents must be attached to the declaration: copies of them are sufficient. In addition to the declaration and supporting documents, you must attach an application for a tax refund with details of where to transfer the overpaid amount of personal income tax.
A certificate of income must be attached to the declaration. It can be taken at work or downloaded from the taxpayer’s personal account. Certificates for the previous year appear in your personal account around April of the following year or later, when employers submit reports.
To receive a deduction this year from your employer, you need to submit an application to confirm your right to deduction. It is convenient to fill out and send it in the taxpayer’s personal account on the website nalog.ru. In this case, there is no need to fill out a declaration.
Required documents
The fiscal department does not simply return funds. It is necessary to collect documents confirming the costs:
- extract from the Unified State Register of Real Estate,
- purchase and sale agreement,
- salary certificate in a standard form,
- receipts confirming expenses,
- identification document,
- individual taxpayer code.
There are several options for transferring documents. You can personally come to the appointment at the Federal Tax Service. If this is not possible, then the application can be sent by post. However, in this case, the processing may be delayed (it will take time to send an email message). To submit an application through a proxy, you will need to issue a power of attorney.
How to get a tax deduction for the purchase of land and return the tax
The declaration is verified within three months. Another month is allocated by law for the transfer of personal income tax to the taxpayer’s account. In total, it may take about four months from the moment the declaration is submitted until the money is returned to the account.
The application for the right to deduction is checked for about a month. Within 30 days, the tax office issues a notice of the right to deduction. It must be taken to the employer. If there is such a notification, then the accounting department will stop withholding personal income tax from the salary until the accrued income from the beginning of the year does not exceed the deduction amount specified in the notification. If it was not possible to use the entire deduction in a year, the balance is carried over to the next year, but the notification must be received again.
The declaration and application can be sent to the tax office every year, taking into account the balance of the deduction and the tax already returned. Until the entire personal income tax amount is returned.
The procedure for obtaining a deduction from the Federal Tax Service and through the employer
Tax deductions can be issued in two ways. In the first case, it implies the return of personal income tax paid back in a lump sum, in the second - a reduction in the tax base from which personal income tax is withheld (personal income tax is no longer withheld from a citizen’s monthly income and his net income increases).
Like most other tax deductions, property and land, you can
receive through the Federal Tax Service at your place of residence and through your employer. Each of these methods has its own nuances.
To process a return to the Federal Tax Service, you need to wait until the end of the year in which the purchase was made and submit a package of documents. After verification, the funds will be transferred to the individual’s account.
Registration with the employer allows you not to wait until the end of the year, but makes it possible to receive a deduction immediately after registering ownership of the house and land.
Obtaining a deduction in this case should also begin with a visit to the Federal Tax Service so that the tax authorities provide a notification of the right to reduce the tax base. A standard package of documents will be required, in addition to the declaration and 2-NDFL certificate.
With the notification received, you need to go to the accounting department at your place of work. From the month following the submission of the application, the citizen will receive an increased payment.
For example, Aleshin’s monthly income is 35,000 rubles. Personal income tax of 13% is withheld from him monthly and he receives 30,450 rubles in his hands. (35000-35000*13%). When a refund is issued, his net monthly earnings will increase by 4,550 rubles.
Find out how to draw up a lease agreement for agricultural land correctly! The procedure for allocating a share of an apartment from common shared ownership, as well as a list of necessary documents, can be found here.
What documents are needed when selling an apartment? Find out about this in our article.
Useful video
An income tax refund from the purchase of land is a good source of investment in modernizing communications. The same funds can be used to implement other improvements for the new resident.
There are no restrictions that indicate what to spend the money received in the form of a personal income tax discount. Only important criteria for acquiring such income are indicated:
- rules for processing compensation payments for real estate;
- reasons for returning 13 percent of the money spent;
- payout rates.
More detailed information about how such a return is calculated as a deduction for land and how such money is paid, as well as how in practice to return funds that are invested in real estate at a 13 percent personal income tax rate, is in the video.
Is property return due?
How do you know if personal income tax can be reimbursed?
Tax residents of the Russian Federation who are in the country for more than 183 days a year, have official work and pay income tax of 13% every month have the right to refund the tax when purchasing a plot and land with a house.
In addition, a tax resident can receive a deduction for past years of work, even while unemployed.
Pensioners who have additional income subject to tax are eligible to receive a tax refund. In this case, the income must be above the subsistence level.
Citizens who bought a house or land after 2014 have the right to receive a tax deduction for the amount that they did not use before (it is allowed to receive no more than 260 thousand rubles)
