Post by nurnobisorker13 on Oct 29, 2024 22:11:45 GMT -6
Many property owners are aware that when selling property, a tax liability will inevitably arise. However, not everyone knows that it is possible to significantly reduce the amount of tax payable. Let's figure out in which cases it is possible to reduce the tax deduction when selling an apartment, who is authorized to receive it, in what amount, where to apply and how to reduce the amount of income tax.
Contents hide
1) What is a property deduction?
1.1) What amount can be returned?
1.2) What are the consequences of non-payment of taxes?
2) In what cases can you apply for a property deduction upon sale?
2.1) Buying a new home
2.2) Acquisition of an apartment in shared ownership
2.3) First home
2.4) Other use of proceeds
2.5) Selling an apartment after inheritance
3) When you can not pay taxes
3.1) Families with 2 or more children
3.2) Three or five years of property ownership
4) When is a property tax deduction beneficial when selling property?
4.1) Lack of documents confirming expenses for the purchase of housing
4.2) When housing costs are less than 1 million rubles
5) What documents are required to receive a refund of property tax deduction for an apartment
6) How to get a deduction
7) Selling an apartment profitably: how to save on taxes through a property deduction
What is a property deduction ?
Property tax on the sale of an apartment is bulk telegram blast a mandatory payment that the owner of an apartment, house, room must pay when selling living space. If you sell real estate that you have owned for less than five years (or less than three years if it is an inheritance or a gift), you must pay 13% tax on the sale. However, you can take advantage of a tax deduction for this sale.
What amount can be returned?
To receive a tax deduction when selling an apartment, two calculation methods are available:
The law establishes that the maximum reduction of taxable income when selling residential real estate is 1 million rubles. In other words, the amount of income on which tax is charged at a rate of 13% is excluded by 1 million rubles in accordance with tax rules. Example: if an apartment is sold for 10 million rubles, then 13% tax is paid on 9 million rubles (1 million rubles is subtracted from 10 million rubles). In this case, the tax amount will be 1.1 million rubles.
Instead of a tax deduction, you can take into account documented expenses, that is, the difference between the purchase and sale price. If an apartment is bought for 10 million rubles and sold for 15 million rubles, the tax is paid on the difference: 15 million rubles minus 10 million rubles = 5 million rubles. The tax will be 650,000 rubles. This method is more profitable, since the taxable base is reduced by the actual profit.
Both individuals and legal entities can use the benefit to reduce the tax levied to the state budget when selling real estate. The value of the property deduction is not strictly fixed. For example, for residential real estate, the limit is set at 1 million rubles, while for non-residential properties this amount is reduced to 250,000 rubles. It is necessary to understand that this amount will not be returned to the taxpayer, but will only reduce the base for calculating the tax rate. The price indicated in the documents for the sale of the apartment is compared with the cadastral value of the property, multiplied by a reduction factor.
The deduction for the sale of real estate, unlike the deduction for the purchase, can be used an unlimited number of times during life, however, only once a year.
What are the consequences of non-payment of taxes?
If you are late in filing your tax return, you will have to pay a fine (5% of the tax amount for each month of delay). The maximum fine will be 30% of the tax amount, but it will not be less than 1 thousand rubles.
If you have filled out your tax return correctly and on time but have not paid your taxes within the prescribed time, you will be subject to penalties, although fines will not be applied.
In what cases can you apply for a property deduction when selling?
In Russia, a property tax deduction for the sale of an apartment is provided in certain cases according to tax legislation. A person must be a tax resident of the Russian Federation, which means living in the country for more than 183 days a year.
Try paying in installments
First payment only after 30 days
Find out the limit
Buying a new home
The deduction may be provided if you sell the apartment and use the proceeds to purchase another residential property. The new property must be purchased within one year before the sale or within three years after the sale.
A tax deduction for a simultaneous purchase and sale allows you to offset tax liabilities. To reduce personal income tax when selling a home, you can use the deduction and reduce your income by 1 million rubles. The 13% tax will be calculated on the remainder.
Example: Andrey is going to buy a new home, but before that he wants to sell his old apartment for 4.2 million rubles. To reduce the tax, Andrey deducted 1 million rubles from the income from the sale and paid personal income tax on the remainder - 3.2 million rubles (4,200,000 - 1,000,000).
Instead of using the 1 million ruble deduction, you can use the purchase expense deduction. You must document your purchase costs. Income tax will be calculated taking into account the difference.
Example: Igor plans to buy a new apartment, but to do this he needs to sell the old one for 4.5 million rubles. He previously bought it for 3.9 million rubles. Instead of reducing his income by 1 million rubles, Igor reduces his income by previously incurred expenses and pays tax on 600 thousand rubles (4,500,000 - 3,900,000).
Acquisition of an apartment in shared ownership
If you purchase new housing as your own or in shared ownership, you also have the right to a property deduction when selling your old apartment. When selling real estate that is in shared ownership, the amount of the deduction depends on the subject of the transaction.
If the property is sold as a single unit under one contract, the deduction is distributed between the sellers in accordance with their shares.
If the sale concerns specific allocated shares or the sale of shares under separate agreements, each seller receives the deduction in full.
First home
A deduction can be provided when selling an apartment if this is your first home that has not been sold before. Conditions for reducing the tax burden in this case:
The proceeds from the sale must be used to purchase new real estate (apartments, houses, etc.).
There is usually a limited period between selling your old home and buying a new one, otherwise the deduction may be denied (you must buy your new home no later than 3 years after selling your old one).
Other use of proceeds
If you do not plan to buy a new home, you can use the proceeds for construction, reconstruction or acquisition of other real estate. In this case, it is also possible to receive a deduction.
Contents hide
1) What is a property deduction?
1.1) What amount can be returned?
1.2) What are the consequences of non-payment of taxes?
2) In what cases can you apply for a property deduction upon sale?
2.1) Buying a new home
2.2) Acquisition of an apartment in shared ownership
2.3) First home
2.4) Other use of proceeds
2.5) Selling an apartment after inheritance
3) When you can not pay taxes
3.1) Families with 2 or more children
3.2) Three or five years of property ownership
4) When is a property tax deduction beneficial when selling property?
4.1) Lack of documents confirming expenses for the purchase of housing
4.2) When housing costs are less than 1 million rubles
5) What documents are required to receive a refund of property tax deduction for an apartment
6) How to get a deduction
7) Selling an apartment profitably: how to save on taxes through a property deduction
What is a property deduction ?
Property tax on the sale of an apartment is bulk telegram blast a mandatory payment that the owner of an apartment, house, room must pay when selling living space. If you sell real estate that you have owned for less than five years (or less than three years if it is an inheritance or a gift), you must pay 13% tax on the sale. However, you can take advantage of a tax deduction for this sale.
What amount can be returned?
To receive a tax deduction when selling an apartment, two calculation methods are available:
The law establishes that the maximum reduction of taxable income when selling residential real estate is 1 million rubles. In other words, the amount of income on which tax is charged at a rate of 13% is excluded by 1 million rubles in accordance with tax rules. Example: if an apartment is sold for 10 million rubles, then 13% tax is paid on 9 million rubles (1 million rubles is subtracted from 10 million rubles). In this case, the tax amount will be 1.1 million rubles.
Instead of a tax deduction, you can take into account documented expenses, that is, the difference between the purchase and sale price. If an apartment is bought for 10 million rubles and sold for 15 million rubles, the tax is paid on the difference: 15 million rubles minus 10 million rubles = 5 million rubles. The tax will be 650,000 rubles. This method is more profitable, since the taxable base is reduced by the actual profit.
Both individuals and legal entities can use the benefit to reduce the tax levied to the state budget when selling real estate. The value of the property deduction is not strictly fixed. For example, for residential real estate, the limit is set at 1 million rubles, while for non-residential properties this amount is reduced to 250,000 rubles. It is necessary to understand that this amount will not be returned to the taxpayer, but will only reduce the base for calculating the tax rate. The price indicated in the documents for the sale of the apartment is compared with the cadastral value of the property, multiplied by a reduction factor.
The deduction for the sale of real estate, unlike the deduction for the purchase, can be used an unlimited number of times during life, however, only once a year.
What are the consequences of non-payment of taxes?
If you are late in filing your tax return, you will have to pay a fine (5% of the tax amount for each month of delay). The maximum fine will be 30% of the tax amount, but it will not be less than 1 thousand rubles.
If you have filled out your tax return correctly and on time but have not paid your taxes within the prescribed time, you will be subject to penalties, although fines will not be applied.
In what cases can you apply for a property deduction when selling?
In Russia, a property tax deduction for the sale of an apartment is provided in certain cases according to tax legislation. A person must be a tax resident of the Russian Federation, which means living in the country for more than 183 days a year.
Try paying in installments
First payment only after 30 days
Find out the limit
Buying a new home
The deduction may be provided if you sell the apartment and use the proceeds to purchase another residential property. The new property must be purchased within one year before the sale or within three years after the sale.
A tax deduction for a simultaneous purchase and sale allows you to offset tax liabilities. To reduce personal income tax when selling a home, you can use the deduction and reduce your income by 1 million rubles. The 13% tax will be calculated on the remainder.
Example: Andrey is going to buy a new home, but before that he wants to sell his old apartment for 4.2 million rubles. To reduce the tax, Andrey deducted 1 million rubles from the income from the sale and paid personal income tax on the remainder - 3.2 million rubles (4,200,000 - 1,000,000).
Instead of using the 1 million ruble deduction, you can use the purchase expense deduction. You must document your purchase costs. Income tax will be calculated taking into account the difference.
Example: Igor plans to buy a new apartment, but to do this he needs to sell the old one for 4.5 million rubles. He previously bought it for 3.9 million rubles. Instead of reducing his income by 1 million rubles, Igor reduces his income by previously incurred expenses and pays tax on 600 thousand rubles (4,500,000 - 3,900,000).
Acquisition of an apartment in shared ownership
If you purchase new housing as your own or in shared ownership, you also have the right to a property deduction when selling your old apartment. When selling real estate that is in shared ownership, the amount of the deduction depends on the subject of the transaction.
If the property is sold as a single unit under one contract, the deduction is distributed between the sellers in accordance with their shares.
If the sale concerns specific allocated shares or the sale of shares under separate agreements, each seller receives the deduction in full.
First home
A deduction can be provided when selling an apartment if this is your first home that has not been sold before. Conditions for reducing the tax burden in this case:
The proceeds from the sale must be used to purchase new real estate (apartments, houses, etc.).
There is usually a limited period between selling your old home and buying a new one, otherwise the deduction may be denied (you must buy your new home no later than 3 years after selling your old one).
Other use of proceeds
If you do not plan to buy a new home, you can use the proceeds for construction, reconstruction or acquisition of other real estate. In this case, it is also possible to receive a deduction.