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Published: 12/19/2017
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Concluding a transaction for the purchase and sale of an apartment for the buyer is fraught with large expenses, which include not only the funds spent on the purchase itself. The list of expenses includes paperwork, as well as the services of a realtor. If you purchase a home with a mortgage, costs may also increase.
- Major Buyer Expenses
- Costs when buying an apartment with a mortgage
Who must pay tax on the sale of an apartment: the seller or the buyer
Most taxpayers are aware that after the sale of an apartment, they may be required to pay taxes. But few of them know exactly in what case and in what amount the tax must be paid, and in what cases the taxpayer-seller is exempt from paying the tax. And given that laws are regularly changed, supplemented and various amendments are made, it becomes more difficult to understand. The latest amendments came into effect at the beginning of 2106.
Apartment sales tax
This tax is paid by the seller, that is, the person who owned the apartment before the sale. The owner can be either a resident of the Russian Federation or a non-resident of the Russian Federation.
A resident is a person who resides permanently in Russia and spends at least 183 days a year in the country.
A non-resident is a person who lives in the country no more than 183 days a year.
These categories pay tax differently. The tax rate for a non-resident can reach up to 30%, and a resident in some cases may be completely exempt from paying tax.
Those who do not pay tax:
- He accepted the apartment as a gift and later sold it;
- Entered into inheritance rights to the apartment and later sold it;
- He privatized the apartment and later sold it;
- He got the apartment thanks to a life-long annuity agreement and later sold it.
But there is a limitation on the period of ownership of real estate.
Those taxpayers listed above who have owned the apartment for at least three years are exempt from paying tax upon sale.
All other taxpayers who are sellers of apartments must maintain ownership of the apartment for at least 5 years in order to be exempt from paying tax when selling it.
Previously, this period for them was also 3 years, but with the entry into force of amendments to the law at the beginning of 2020, this period has increased.
Also, in accordance with the latest changes, tax is now levied on income generated from the sale of housing, the amount of which should not be less than 70% of the cadastral value of the property.
The amount of tax on the sale of an apartment
The tax rate for the tax on the sale of an apartment is 13% of the income arising from its sale. Thus, in order to calculate the amount of tax payable, the amount of income must be calculated.
If the contractual value of the apartment is higher than the cadastral value, then it is allowed to take it into account and calculate the tax base from its size, multiplying by 0.7 in the same way.
Thus, when calculating the amount of tax to be paid, the legislator requires taking into account the maximum amount.
Tax deductions when selling an apartment
It is important to know that there are ways to reduce the tax base, and, accordingly, the amount of tax payable. One of these methods is the use of a property deduction.
This right appears to the seller's taxpayer if the apartment has been in his ownership for more than three years in the case of a gift, inheritance, privatization or a rental agreement, or more than five years in other cases.
A deduction is a certain amount by which the income generated after the sale of an apartment is reduced when calculating the amount of tax payable. This value is 1,000,000 rubles.
It turns out that if the apartment was sold for 3,000,000 rubles, then the amount for calculating the tax will be 2,000,000 rubles. Next, from 2,000,000 rubles you need to calculate 13%. The amount received is subject to payment to the budget as tax.
If the apartment was sold for less than 1,000,000 rubles, and, in addition, the sale amount exceeds the cadastral value, then there is no need to pay tax.
These expenses are taken into account only if they are supported by supporting documents: contracts, acceptance certificates, account statements, receipts for receipt of money and other documents confirming the transfer of money.
If confirmed expenses exceed income, then no tax is payable.
Filing a declaration and paying tax on the sale of an apartment
After selling the apartment, the seller must file a return on income from the sale to the tax office. It is submitted to the tax authority at the place of registration of the seller before April 30, in the year following the year in which the sale occurred.
Do I need to pay tax when buying an apartment?
Many people dream of becoming the happy owners of their own home. However, in addition to positive emotions, there are also troubles accompanying the event. There is a lot of paperwork alone, and in addition to this, you also need to pay taxes.
Not all citizens are aware of when they need to pay for them and what benefits exist for the population. Let’s take a closer look at the specifics of tax payments after purchasing real estate.
If you want to find out how to solve your specific problem, please contact the online consultant form on the right. It's fast and free! Or call us at :
+7 Moscow, Moscow region
+7 St. Petersburg, Leningrad region
8 Federal number (free call for all regions of Russia)!
Do I need to pay tax when buying an apartment in 2020?
It is necessary to immediately make a reservation that the purchase and sale transaction is not subject to tax on the part of the buyer. When it is completed, such an obligation arises only on the seller. But here there are two options for the development of events.
First option
Tax obligations, in this case, depend on the date of acquisition of the property and its value according to the agreement between the parties.
The situation with apartments purchased before 01/01/2016 is as follows: a citizen who has owned it for more than 3 years is exempt from paying tax if it is sold. The situation is completely different with residential real estate, which the owner has owned for less than 3 years and its value is less than one million rubles.
The situation with apartments purchased after this date is somewhat different. The law exempts the seller from paying tax on the income of those owners who have owned the property for at least five years.
Some time ago, the Federal Tax Service determined the cost of housing (and, accordingly, the cost of tax) on the basis of a concluded sale and purchase agreement.
According to current legislation, the cost of housing is determined in two ways:
- The result of the cadastral valuation;
- 70% of market value.
The tax authority independently chooses the method in which the cost is maximized.
The result of the assessment by the Cadastral Chamber is taken as of the beginning of the year in which the transaction is made. The law exempts from paying tax for real estate transactions worth up to one million rubles. If the cadastral valuation of the housing does not exceed the specified value, then the seller does not need to pay anything to the treasury.
Tax on the sale of real estate in 2020.
How to reduce the tax amount when selling an apartment, read here.
Tax refund methods
There are 2 ways to get your tax back today:
- Through the employer for the current year. In such a situation, the taxpayer will not need to fill out a return. The tax refund will be carried out by the Federal Tax Service through a notification. This option for registering a deduction is made in accordance with clause 8 of Art. 220 of the NKRF and consists in the fact that the employer company reduces the employee’s income, which is subject to taxation for the year, by the amount of tax, i.e., it stops withholding personal income tax from the salary.
- By submitting a 3-NDFL certificate for the previous period. This method is suitable for processing a return for last year. The taxpayer can send 3-NDFL throughout the next period. According to paragraph 7 of Art. 220 NKRF, the end of April deadline for housing tax refund is not valid. Its compliance is necessary only when declaring other income.
Who pays tax when buying an apartment, the seller or the buyer?
Until recently, the purchaser of real estate had to prove that the funds for these purposes were obtained legally.
Currently, the tax for the completed transaction is paid by the seller. The logic is that he becomes the owner of a large sum and receives a certain benefit from the transaction.
There is one exception to this statement. The new owner is obliged to pay part of the cost of the property to the state if the latter was donated to him.
Donation of an apartment
Real estate received as a gift is subject to income tax. It is paid by the beneficiary, in this case, the donee citizen. The amount that must be paid to the treasury is determined as follows: the estimated value of the apartment is multiplied by a factor of 0.13.
How to calculate the estimated value?
To do this, subtract one million rubles from the cadastral value.
The algorithm for calculating the tax amount is as follows:
- Find out the market value of housing and the cadastral value as of the beginning of the year the property was received;
- Take the larger of these values;
- Subtract one million rubles from it;
- Multiply the result by a factor of 0.13.
If the result turns out to be negative, therefore, you do not owe the state anything for this transaction. Housing worth up to one million rubles is not taxed upon purchase, sale or gift.
Gifts from close relatives (even if it is an apartment in a high-rise building) are not taxed. But if it is received from other persons, then a contribution to the state treasury may be required. Inherited property is also not considered income and taxes are not paid on it.
An unemployed resident of Pinsk bought an apartment. The tax office asked: where did the money come from?
February 4, 2014 at 11:54 am, views: 10980: Business, economics, analytics
It would seem that solving a personal housing problem is a joyful event. This was also the case for a Pinsk resident who bought herself an expensive apartment. But exactly until tax officers came to her with the question: “Where did you get that kind of money?” The case file states that the apartment cost the woman 440 million rubles. In terms of foreign currency, this amounts to about 46 thousand dollars. By Pinsk standards, the purchase is quite expensive. On the Internet, for that kind of money they offer to buy a good two-room apartment in the city center. But, perhaps, this ordinary transaction would not have interested the local tax inspectorate if not for one fact: the citizen who bought the apartment did not officially work anywhere from 2006 to 2012. — We requested a declaration of income and property for recent years. This woman did not receive a salary. She reported that she covered part of the cost of the apartment by selling her car. And the missing amount, according to her, was received as a gift from third parties. We called them, and they confirmed the fact of the transfer of money,” the Ministry of Taxes Inspectorate for Pinsk reveals the details of the case. However, the final amount in the income statement ultimately did not reach the cost of the apartment. Expenses turned out to be 30 million rubles higher than income. For this, an unemployed resident of Pinsk paid income tax of 3.2 million. “This citizen reacted quite calmly to the fact that the inspectors were interested in her income. And she voluntarily paid off the amount of the tax, they say in the Pinsk city inspectorate.
Source of information: https://finance.tut.by/
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What tax do you need to pay when buying an apartment?
The laws of the country oblige sellers of real estate to pay personal income tax. One of the main conditions that the transaction must satisfy is that he must own the apartment for less than three years. If this is not the case, then the state does not need to pay anything.
In this case, the buyer is not required to pay anything to the country's budget. This is logical, since he has already paid a lot of money for the apartment. There are situations when one of the conditions of the transaction on the part of the seller is the payment of income tax for him.
The buyer can agree to this condition only if he is extremely interested in the seller’s offer and feels that he will benefit from the transaction. Organizations acting as a buyer will never take such a step.
Additional costs can only be covered by the benefits of the transaction, a good discount, as well as excellent characteristics of the property purchased under the purchase and sale agreement.
Taxes after purchasing an apartment
A citizen who bought housing in an apartment building and registered ownership of it is now required to pay property tax.
In 2020, a new calculation scheme came into effect. Now the basis is the result of the cadastral valuation, which is carried out once every five years. The tax rate is now 0.1%.
The cadastral valuation is slightly lower than the market value, which helps reduce the tax payment. If you take, for example, a 2-room apartment, you will have to pay about 2 thousand rubles a year for it.
For whom is the deduction available for the purchase of living space?
In order for a person to return tax for the purchase of living space, he must:
- have Russian citizenship;
- buy housing in Russia;
- pay squares from income or from a received housing loan;
- register ownership of the living space or have received a deed confirming the transfer of housing in the new building into his possession.
Based on clause 5 of Art. 220 NKRF, a tax refund for the purchase of housing can be made from a developer company or an individual.
However, the right to register it does not arise if the purchase is made from a close relative, even if the full market value of the property is paid.
Important! If the living space was purchased before the beginning of 2014, then an individual can return the tax solely on its price within the established limit. Moreover, he will no longer be able to transfer the remaining part of the funds. But if the housing was purchased in 2014 at a cost of less than 2,000,000 rubles, then the citizen has the right to redirect the remainder of the tax to the purchase of other real estate before the end of the limit.
Does a pensioner need to pay tax when buying an apartment?
Is a pensioner who sells his home required to pay personal income tax?
The answer to the question depends on the duration of ownership of the property until the day the purchase and sale agreement is concluded.
If this period is more than three years, then it does not incur any tax consequences for the seller. There is no need to declare this operation. If he owned the home for a shorter period of time, then 13% of its cost must be transferred to the budget.
Some pensioners do not see the difference between property tax and personal income tax. Due to the absence of a tax on real estate ownership, they believe that there will be no tax on income from the sale of residential premises. However, pensioners pay income tax on the same basis as other categories of citizens. The only income that is not taxed for seniors is pension payments.
Real estate transactions are subject to declaration to the tax authorities. Penalties are provided for violation of this procedure. The tax return must be filed by April 30 of the year following the year of purchase.
If you want to find out how to solve your specific problem, please contact the online consultant form on the right. It's fast and free! Or call us at :
+7 Moscow, Moscow region
+7 St. Petersburg, Leningrad region
8 Federal number (free call for all regions of Russia)!
How and when to submit documentation for property tax?
If a citizen plans to receive a deduction for living space for past periods, then he should send separate declarations for a specific year to the Federal Tax Service.
If both husband and wife want to file a tax on the same type of real estate, then 3-NDFL is transferred individually, i.e., each spouse draws up the document for himself.
Also, with the declarations, a package of documentation is sent to the tax office along with an application, which indicates the details for the transfer of the paid income tax.
The Federal Tax Service checks the declaration over a three-month period. After this, the inspection is given another 30 days to transfer the deduction to the taxpayer’s account.
The application for the right to a tax refund is checked for a month, and then a corresponding notification is issued. It should be transferred to the employing company in order to stop withholding personal income tax from the salary until the taxpayer’s income exceeds the amount of the deduction specified in the notification.
If it is not possible to use the entire tax amount in 12 months, the remaining portion will be automatically transferred to the next year. In this case, the taxpayer will need to take the notice again.
The declaration and application can be sent to the tax office annually, indicating the available balance and the previously received amount, until the entire tax is completely exhausted.
Important! According to paragraph 5 of Article 220 of the NKRF, if funds from the capital were paid for part of the living space, then when returning the tax, this amount must be deducted from the total cost. The resulting difference will be considered expenses, from which a 13% refund can be made.
Need to know!
- His relatives do not have the right to receive a tax refund on behalf of the taxpayer. For example, if residential real estate is purchased by the retired father of a taxpayer who has no taxable income, even if he has never filed a tax return before. In this case, he has the right to a personal income tax refund, but he will not be able to receive a deduction, since he does not pay 13% to the budget.
- If parents pay for their children's shares, they can make a tax refund on the expenses. This possibility is spelled out in paragraph 6 of Article 220 of the NKRF. This means that the cost of the share of children under the age of majority, paid from the income of the parents, does not expand the limit of their deduction, but is included in it. In any case, parents will be able to refund property taxes from 2,000,0000 rubles, and their expenses on their children’s shares will be taken into account as personal expenses. Thanks to this, upon reaching adulthood, children will retain the right to receive property taxes in full.
- For persons receiving pension benefits, the law provides for a special procedure for obtaining a personal income tax deduction. This category of citizens has the right to file a property tax not only for the time in which the living space was purchased, but also for subsequent years, as well as for the previous 3 years, based on clause 10 of Art. 220 NKRF. For example, a citizen registered ownership of a residential premises in 2020 and received pensioner status in the same year. He has already stopped paying personal income tax, so he will not be able to make a deduction for the next years. However, a pensioner will be able to issue a tax refund for the past 3 years, as well as for several months of 2020, during which they regularly paid income taxes. This right is also available to citizens who are both retired and continue to officially work.
