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Published: 09/07/2016
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A property deduction when purchasing real estate partially compensates for the costs associated with purchasing an apartment.
Likewise, the tax deduction on mortgage interest, although sometimes insignificant, still reimburses the costs associated with paying off the loan. Borrowers who receive official income can apply for it .
- What is a tax deduction for paying mortgage interest?
- How to calculate the deduction amount?
- Maximum amount to be refunded
- Ways to receive a deduction
- Necessary documents and algorithm of actions
- Tax deduction for shared ownership
Main deduction
When purchasing an apartment/house using mortgage funds, you can receive two tax deductions: the main deduction (clause 3, clause 1, Article 220 of the Tax Code of the Russian Federation) and a deduction for mortgage interest (clause 4, clause 1, Article 220 of the Tax Code of the Russian Federation).
The main deduction when purchasing an apartment with a mortgage is no different from the deduction for a regular purchase. We will not consider it in detail, but will only recall the main points:
- The maximum deduction amount is 2 million rubles. You can return 13% of this amount - 260 thousand rubles. Read more “Amount of deduction when purchasing a home.”
- The right to deduction arises after receipt of the Acceptance and Transfer Certificate of the apartment (when purchasing under an equity participation agreement) or the date of registration of ownership according to an extract from the Unified State Register (if purchasing under a purchase and sale agreement). You can submit documents for a deduction to the tax authority at the end of the year in which the right to it arose. Read more “Information on property deduction”, “When the right of deduction arises”.
- You can include both your own and borrowed funds in the deduction. From a legal point of view, loan funds are also considered your expenses.
The list of required documents and the process of obtaining a deduction are described in the articles: “List of documents for obtaining a deduction” and “The process of obtaining a deduction.”
Example: In 2021 Dezhnev G.S. took out a mortgage loan from the bank in the amount of 2 million rubles and bought an apartment worth 2.2 million rubles. The certificate of registration of ownership was also issued in 2021.
In 2021 Dezhnev G.S. filed a 3-personal income tax return for 2021 with the tax office and declared the main deduction in the maximum amount of 2 million rubles (towards a return of 260 thousand rubles) despite the fact that Dezhnev spent only 200 thousand rubles of personal funds. He can also claim a deduction for mortgage interest.
Necessary documents and algorithm of actions
In order to return part of the funds to citizens who bought housing and paid for a targeted loan, it is necessary to prepare the following package of documents:
- Declaration 3-NDFL. The declaration form and instructions for filling out are updated annually and at the beginning of the year are posted on the website of the Federal Tax Service. In addition, you can print the completed declaration from the taxpayer’s personal account;
- Copy of the passport;
- Original certificate 2-NDFL;
- Loan agreement with loan repayment schedule (original and copy);
- Receipts for payment of monthly payments or a certificate from the bank about interest paid for the year (original).
Documents related to the purchase of real estate are not needed if they were submitted when receiving a deduction in connection with the purchase of an apartment.
Otherwise, a certificate and a contract for the purchase of housing, as well as payment receipts (receipts) confirming settlement with the seller, are required.
Documents are submitted to the tax office at the applicant’s place of registration in person, through an authorized representative or by Russian Post. To avoid standing in line, you can make an appointment with a specialist in advance for a certain time through the Federal Tax Service website. When visiting, it is advisable to have a copy of the TIN with you.
Accepted documents will be sent for verification. A desk check of data for obtaining a deduction is carried out by employees of the territorial tax office within 3 months. After this, the authorized person makes a decision on granting a deduction or refusing to return the personal income tax.
Reasons for refusal may be:
- Indication of false information;
- Providing an incomplete package of documents.
A citizen can eliminate shortcomings and comments, after which he will again have the right to receive a deduction.
If it is impossible to correct the situation, and the citizen does not agree with the decision of the Federal Tax Service to refuse to provide a refund of part of the mortgage interest, he can appeal the decision:
- In higher divisions of the tax authority;
- In a court.
If a positive decision is made on the return of personal income tax, the citizen fills out a return application, in which he indicates the bank details for transferring funds. We are talking about a current account opened in the name of the applicant.
Within a month from the date of submitting the application, the money will be transferred to the specified account. To return personal income tax, you can use accounts opened in any banks in the Russian Federation.
Detailed information about what is necessary to receive a deduction and the procedure for providing it is available on the Federal Tax Service website.
To rent an apartment for a long time from the owner, you need to spend a lot of time searching for suitable options. How to use a safe deposit box when paying for an apartment? Find out about it here. A detailed algorithm for registering a power of attorney for the sale of an apartment is in this article.
Mortgage interest deduction
When purchasing a home with a mortgage, in addition to the main deduction, you can also receive a deduction for the loan interest paid and return 13% of the actual mortgage interest paid.
Note: Your mortgage payments are divided into two parts: principal payments and loan interest payments. You can receive this deduction only for payments on credit interest (payments on the principal debt will not be included in the deduction).
Wherein:
1. The right to deduct mortgage interest arises only at the moment the right of the main deduction arises. If the mortgage was issued earlier than the year in which the extract from the Unified State Register (or the Transfer and Acceptance Certificate) was received, then the deduction can still include all the interest you paid on the first mortgage payments.
Example: In 2021 Belsky G.I. took out a mortgage and entered into a share participation agreement for the construction of an apartment, and in 2021 he received an Apartment Acceptance Certificate. Despite the fact that the mortgage has been paid since 2021, contact the tax office minus Belsky G.I. maybe only in 2021. But he will be able to receive a deduction for all interest actually paid since 2018.
2. The maximum amount of deduction for mortgage interest is 3 million rubles (to be returned 390 thousand rubles).
Note: if the loan agreement was concluded before January 1, 2014, then the old rules apply and the amount of credit interest deduction is not limited.
Example: In 2021 Ulanova N.N. took out a mortgage loan of 10 million rubles from the bank and bought an apartment worth 12 million rubles. For 2010-2020 Ulanova N.N. paid 4 million rubles in mortgage interest.
In 2021 Ulanova N.N. filed a 3-NDFL declaration for 2021 with the tax office and declared the main property deduction in the amount of 2 million rubles. (to be returned 260 thousand rubles), as well as a deduction for credit interest in the maximum amount of 3 million rubles. (to be returned 390 thousand rubles).
Only mortgage interest actually paid for previous calendar years can be claimed as a deduction.
Example: In June 2021 Grechikhin S.D.
took out a mortgage and bought an apartment. In 2021, he can submit a 3-NDFL declaration for 2021 to the tax office to receive a basic deduction and a deduction for interest paid from July to December 2020. In 2022 Grechikhin S.D. will be able to submit documents for 2021 (add interest paid in 2021 to the declaration), in 2023 - for 2022, etc.
Who is eligible for an income tax refund?
Any citizen of the Russian Federation who is officially employed, receives a “white” salary and pays a 13% tax on personal income can return part of the taxes. These are employees of various organizations and entrepreneurs who work according to the basic taxation system. Pensioners can also apply for an income tax refund if no more than three years have passed since their retirement.
And if you purchased real estate before 2014, and you have a husband or wife, then payments can also be increased. After all, spouses have equal rights to property tax deductions, even if one of the spouses is not indicated in the purchase and sale agreement and the loan agreement. All property and rights acquired during marriage are considered jointly acquired, unless otherwise stated in the marriage contract. The easiest way to understand the principles of personal income tax return is with examples.
For what loans and borrowings can you get an interest deduction?
A deduction for credit interest can be obtained not only under mortgage agreements, but for any targeted loan aimed at the purchase/construction of housing (clause 4, clause 1, article 220 of the Tax Code of the Russian Federation).
For example, if you took out a loan from an employer and the contract states that the loan will be used to purchase a specific apartment, then you will be able to receive a tax deduction on the loan interest paid. If there is no such entry in the agreement, then despite the fact that you spent the loan on the purchase of housing, you will not be able to receive a deduction (Letter of the Ministry of Finance dated 04/08/2016 No. 03-04-05/20053).
Example: In 2021, Shilova K.O. I took out a loan from an organization to buy an apartment. The agreement clearly states that the loan was spent on the purchase of a specific apartment, therefore Shilova K.O. will be able to receive a credit interest deduction.
Example: In 2021 Tamarina E.M. I bought an apartment for 2 million rubles with a loan for consumer purposes in the amount of 1 million rubles. Since the loan is not intended for the purchase of an apartment, Tamarina E.M. will be able to receive a property deduction in the amount of 2 million rubles (for a return of 260 thousand rubles), but will not be able to take advantage of the interest deduction.
Return terms 13 percent
At the initial stage of the procedure, a package of documents should be prepared. You can find out the list of documents at the branch or on the website. The law stipulates that the Federal Tax Service reviews the application and the documents attached to it within 3 months. As practice shows, in rare cases this process takes less time, but perhaps in 2021 the deadlines for refunding apartment taxes will be changed.
Payments are made within one month. If you are repaying funds through your employer, the process may be faster. However, in this case you will not be able to receive the entire amount at once.
Documents for processing mortgage interest deductions
To receive a deduction for mortgage interest, in addition to the main documents for the transaction (see “Documents”), you must submit to the tax office a copy of the loan agreement and a certificate of interest paid.
The certificate can be obtained from the bank where you took out the mortgage. Some banks issue a certificate immediately, and some - a few days after a written request (it is better to check with your bank).
Sometimes the tax authority may also request payment documents for payment of mortgage interest (payment orders, bank statements, receipts, etc.). In this case, you can either provide documents (if available) or refer to the letter of the Federal Tax Service of Russia dated November 22, 2012 N ED-4-3 / [email protected] , which states that a certificate of interest paid from the bank is sufficient and additional payment No documents are required to receive a deduction.
The employer can return personal income tax
You don’t have to wait for the end of the tax period. You can receive what is due to you by law from your employer by confirming your right to the Federal Tax Service. To do this you need:
- Submit an application to the Federal Tax Service to receive notification of the right to receive a deduction
- Submit an application to the Federal Tax Service office at your place of residence to receive a notification, attaching copies of the relevant documents.
- In a month, receive a notification from the Federal Tax Service for the employer.
- Submit the received notice to the employer's accounting department. It is this paper that will be the basis for the fact that income tax will not be withheld from you until the end of the year.
If you are confused in all these intricacies, you can use the services of tax consultants or a special service of Sberbank. Filling out the declaration and preparing a package of documents will cost you only 1,500 rubles.
Is it necessary to claim credit interest deduction immediately?
If you have not yet exhausted the main deduction, then you may not immediately claim a deduction for mortgage interest, so as not to submit additional documents to the tax authority. Once the main deduction has been exhausted, you can add information about the credit interest deduction to your return and attach the relevant documents.
Example: In 2021, Khavina M.V. I bought an apartment with a mortgage for 3 million rubles. Income of Khavina M.V. amount to 800 thousand rubles per year (the amount of tax withheld for the year is 104,000 rubles). In this case, in 2021 she will be able to claim the main deduction (since it makes no sense to claim interest).
In 2022, Khavina M.V. will continue to receive the main deduction. In 2023, since the main deduction will be exhausted, she will add to the declaration information about the interest paid from the beginning of payments (from 2020).
Reporting and personal income tax return
A declaration for the return of property deductions can be submitted to the tax authority throughout the entire calendar year. In this case, there is no restriction on the mandatory deadline for submission until April 30.
The only motivating factor for submitting reports as quickly as possible is that the faster Form 3-NDFL is completed and submitted, the faster you can receive money into your current account.
As in other cases, the maximum period for repayment of interest on a mortgage loan is 4 months after submitting the reporting forms: 3 months are allocated for conducting a desk audit and another 1 month for transferring funds to the applicant.
Is it necessary to submit documents for deduction every year?
Often a situation arises when the main deduction has already been exhausted, and the amount of interest paid on the mortgage is small. To save time, you can not submit documents to the tax authority every calendar year, but submit them once every few years, including in the declaration all interest paid for these years.
Example: In 2021 Detnev L.P. I bought an apartment with a mortgage. According to the terms of the mortgage, he annually pays mortgage interest in the amount of 100,000 rubles. Income of Detnev L.P. per year exceed 2 million rubles. In 2021, Detnev filed documents with the tax authority and received a basic deduction and a deduction for interest paid in 2021. In 2021, Detnev may not file a return, but wait a few years and declare all the interest at once: for example, file documents in 2023 and receive a deduction for interest paid in 2021, 2021 and 2022.
How to fill out the 3-NDFL declaration
To refund the tax paid from the borrower's income, you will need to prepare a tax return for the year.
The declaration must contain information about the date of transfer of real estate and the date of registration of ownership of it.
If the mortgage was issued for construction, then you need to indicate the purpose of construction and attach documents to the land plot.
The declaration contains all calculations. Why do you need to prepare seven sheets?
The first two sheets contain information about the taxpayer.
Then follows the first section, necessary for calculating the taxable base.
Section 6 contains data on the amount of income tax that will be refunded.
Sheet A contains information about the profit of an individual and the amount of tax paid for the tax period.
Sheet L contains information about housing purchased with mortgage funds.
The second part of the declaration consists of calculations of the amount of the deduction.
Why they refuse a mortgage, see the article: they refused a mortgage.
Video: return of mortgage interest:
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Interest deduction for refinancing (loan refinancing)
If you refinance a loan with another bank, you can receive a deduction for interest on both the original and the new loan (clause 4, clause 1, article 220 of the Tax Code of the Russian Federation). At the same time, it is important that the new agreement clearly states that it was issued to refinance a previous targeted loan.
Example: Golovanov I.V. I bought an apartment in 2019 worth 3 million rubles (of which 1 million rubles were my own funds, and 2 million rubles were borrowed). In 2021, he refinanced the loan with another bank. Then, upon receipt of the interest deduction, Golovanov I.V. will be able to take into account the interest paid on the first and second loans.
Methodology
There are two ways to receive an income tax refund when purchasing apartments in 2019:
- Through the Federal Tax Service. After the checks required by law, the money will be transferred to the account indicated by the taxpayer. It is wiser to contact the Federal Tax Service at the beginning of next year. This will allow you to confirm your income.
- Through the employer. The principle of returning funds is different - the employer stops deducting income tax from the salary, that is, monthly income will increase by 13%. The advantage of this method is that you do not have to wait until the end of the year. Documents can be submitted immediately and the money will begin to be returned from the next salary
If you choose the second option, you will still have to contact the tax office. Employees must confirm that you are eligible for the deduction. After this, you should contact the company you work for directly.
Thanks to the development of computer and digital technologies, you can apply:
- At the nearest Federal Tax Service branch
- Through the taxpayer’s account (you can track the status of the application)
- Through the State Services website
If you want to save time and submit an application online, make sure you have documents in electronic form in advance and make the necessary scans first.
