The rules in accordance with which mandatory contributions to the budget are made are established by the Tax Code. Art. 220 defines a number of preferential conditions for entities. They are determined depending on the specifics of deductions and the circumstances of the appearance of the object of taxation. Consider further Art. 220 of the Tax Code with commentary. The material will disclose the main provisions of the norm, give notes and clarifications to them.
Art. 220 of the Tax Code of the Russian Federation: property tax deductions
In the process of determining the taxable base, in accordance with paragraph 3 of rule 210, the subject has the right to reduce the amount of deductions to the budget. In particular, he may receive a property tax deduction upon the sale of property, a share in it or the authorized capital of the company. This feature occurs when:
- Leaving the organization.
- Transfer of funds in connection with the liquidation of the company.
- Decrease in the par value of the share in the authorized capital.
- Assignment, if an agreement was signed on the acquisition of a residential building on the basis of shared participation in construction.
The subject can expect to reduce the amount of mandatory deduction in the amount of the redemption price of the land plot or the structure located on it, which he received in kind or in money when the object was seized for municipal or state needs.
Costs of an entity to purchase objects
When determining the base, a subject can compensate for its actual expenses for the purchase of an apartment, room, building or shares in them intended for permanent residence, as well as for their new construction. The amount of deductions can be reduced by the cost of the purchase of a land plot provided for individual housing construction, as well as within the boundaries of which there is a building that is becoming the property.
Features of the calculation
The tax deduction is granted to the entity in the amount of the expenses incurred by him for the construction or purchase of one or more objects. Moreover, its size should not be more than 2 million p. If a person took advantage of this opportunity partially (received less than the specified amount), the balance may be taken into account in the future. For example, a person can again reduce the mandatory deduction to the budget when erecting another structure or receiving the object in private possession within the unused amount. A similar rule applies to land, shares in them. The limit value of the deduction is equal to the size that was in effect in the period in which the subject first had the opportunity to receive it. When purchasing a land plot or a share in it intended for private housing construction, the amount of mandatory deduction can be reduced after receipt of the relevant title documents in the manner prescribed by the relevant law.
Cost structure
Actual expenses for the construction or purchase of an object or shares in it may include expenses for:
- Development of estimates and project.
- Acquisition of finishing and building materials.
- Purchase of a structure (shares in it), including construction in progress .
- Payment of services for completion or decoration.
- Connection to water, electricity, gas supply, sewage networks or the creation of autonomous communications.
Loan repayment costs
Art. 220 of the Tax Code allows for a reduction in the amount of deductions by the amount of interest paid on loans of a targeted nature, which were directed to new construction or to purchase a room, apartment, building, or shares in them. The same rule applies to a land plot that becomes the property of the subject for individual housing construction, as well as having a corresponding building or a share in it within its borders. It is worth noting another opportunity that the Tax Code provides. Art. 220 allows a reduction in the amount of budgetary deductions by the amount of expenses on repayment of interest on loans received from banking organizations for re-crediting (refinancing) loans for new construction / purchase of an apartment, building, room or shares in them. The same applies to land that passes into ownership, including if there is an object on them.
Conditions
The possibilities provided for in paragraph 1 of Art. 220 of the Tax Code of the Russian Federation, are provided taking into account a number of features. In particular, the amount of proceeds is taken into account. The subject can reduce the amount of budgetary deductions by:
- Revenues from the sale of real estate (apartments, rooms, structures), including privatized premises, gardens, summer cottages, plots or shares in them, owned by less than the minimum limit period provided for by norm 217.1. Moreover, their size should not be more than 1 million p.
- Revenues from the sale of other property owned less than the minimum minimum period specified in Art. 217.1. The size of the proceeds as a whole should not be more than 250 tons.
- Revenues from the sale of property of a nature other than securities held for less than 3 years. The amount of income should not be more than 250 thousand rubles.
The first subparagraph is valid for properties acquired after January 1, 2016.
Other cases
When selling property in connection with the liquidation of a company, withdrawing from it, reducing the par value of a share, assignment under an agreement on shared participation in construction, an entity may reduce the object of taxation. The amount of confirmed costs relating to the purchase of these valuables is taken into account. The taxpayer expenses may include:
- Contributions to the authorized capital upon foundation of the organization or upon increase in the company's monetary fund.
- Costs to purchase or expand a stake.
In the absence of the above-mentioned expenses certified by securities, the amount of the budget deduction may be reduced by the amount of receipts received upon termination of participation in the organization. Moreover, in general, they should not be more than 250 tons.
Accounting income
Its order also defines the Tax Code. Art. 220 indicates that when transferring a share in the capital of a company owned by an entity, the costs of its receipt are taken into account in proportion to its decrease. Profit can be paid to the participant in kind or in cash due to a decrease in the company's fund. In this case, the funds spent by a person on its purchase should be accounted for in proportion to the decrease in the capital of the organization. An increase in the fund of an enterprise may occur due to revaluation of its assets. In such cases, when reducing the costs of the entity are taken into account in the amount of payment in excess of the increase in the nominal value of its share.
Liquidation of a foreign company
The tax code (Article 220) in this case also provides for the possibility of the subject to reduce the object of taxation. The procedure applies to the shareholder, founder, shareholder, participant, controlling person. Upon the sale of property obtained upon termination of the activity of a foreign company or structure without the formation of a legal entity, the profits of which were exempt from taxation under paragraph 60 of rule 217, the object is reduced by an amount equal to the value of material assets. It is determined in accordance with the accounting data of the liquidated enterprise. The information taken is generalized at the date of receipt of property from such an organization. It is indicated in the papers that the subject attaches to the application. In this case, the value of the property should not be higher than the market, determined by the provisions of Art. 105.3 Tax Code.
Transactions with a controlled foreign company
When selling property rights (shares, shares, including) received from such a company, if its profit in this case and the costs in the form of the cost of their purchase are excluded from its revenue / loss in accordance with paragraph 10 of Art. 309.1, by an entity acting as a controlling or Russian interdependent person, the amount of costs is determined at the lower of cost:
- Certified by credentials. Reporting information is taken at the date of transfer of ownership of the controlled company. The day is determined by the provisions of Art. 105.3.
- Market.
In the case of the sale of property that is in common or joint ownership, the amount of the deduction is distributed among the co-owners in proportion to each share or by agreement.
Exceptions
Unless otherwise provided in art. 220 of the Tax Code, the provisions of sub. 1 p. 1 does not apply to income received from transactions:
- With securities.
- Real estate or vehicles used in doing business.
Opportunities for the donor
When he sells property that was received during the dissolution of the trust fund, cancellation of the donation, and other cases, the expenses are the funds allocated for the receipt, storage, maintenance of material assets spent on the date of transfer to their organization-owner of capital. This provision is valid if the return is provided for by agreement or Federal Law No. 275. The duration of the possession of real estate received by the donor during the dissolution of the capital, cancellation of the donation, and in other cases, is established taking into account the period of storage of objects at the subject until the moment of their transfer.
Required paper
An entity wishing to take the opportunity to reduce mandatory deductions to the budget must provide documents confirming ownership of the property:
- The contract for the purchase of a building, room, apartment, land or construction on it or a share in them.
- Agreement on shared participation in construction and a deed of transfer (upon acquisition of rights to an object).
- Certificate of the birth of a child - when parents purchase a house, apartment, room, land or a share in them for a minor (or a decision of the authorized body to establish custody of a person under the age of 18).
- Documents confirming the costs of the subject. These include receipts for orders, bank statements on the transfer of funds from the buyer's account to the seller’s account, cash and cashier’s checks, acts of the purchase of building materials, etc.
Note
The tax deduction provided for in sub. 4 p. 1 of the considered norm in the amount of expenses aimed at paying off interest on loans of the target value received before the effective date of the Federal Law No. 212, as well as loans for refinancing these loans, is granted without taking into account the restrictions established by clause 4 of Article 220.
Percentage reduction amount
The deduction provided for in sub. 4 p. 1 art. 220, is provided in the amount of costs incurred in%, according to the terms of the agreement with the bank, but not more than 3 million rubles. In this case, the person must have certifying papers. These include documents that confirm his right to use the provisions of the rule in question, an agreement with a credit institution. The entity also provides securities certifying the repayment costs incurred by it%.
Limitations
Tax deductions are not provided for the entity’s expenses for new construction or purchase of a building, apartment, room (shares in them), covered from the funds of the employer or other persons, family (maternal) capital allocated for additional state support, budget. A similar rule applies to transactions made by interdependent individuals.
Subject Features
Parents (foster carers), guardians, trustees who build or purchase at their own expense the facilities, rooms, apartments, land or shares in them for minor children (wards, wards) can take advantage of the provisions of this norm. The amount of the deduction is determined in these cases in accordance with the costs incurred, taking into account the restrictions provided for in paragraph 3 of the rule in question.
Submission of documents to the supervisory authority
A tax deduction is granted upon the subject's submission of a declaration at the end of the relevant period, unless otherwise provided in the norm under consideration. The ability to reduce the mandatory deduction established in sub. 3 and para. 1, a person may take advantage of the above period when applying with an application (written) to the employer. Moreover, the supervisory inspection must confirm its right to apply the provisions of this norm in the form approved by the executive federal body.
Employer Engagement
Tax deduction established by sub. 4 p. 1 of the considered norm, is provided only in relation to one object. A person may receive it from one or more employers of their choice. If the deduction was provided by one tax agent, and the subject applies to the other employer with the following statement, the reduction of the amount of deduction is carried out in the manner specified in paragraph 7 of the rule in question. The lessee must satisfy the appeal of the person upon receipt from him of the relevant paper issued by the control body. Confirmation of the right of subjects is carried out by the tax inspection in a period of not more than 30 days. from the date of application.
Additionally
If, according to the results of the period, the sum of all the income of the entity received from the employers turned out to be less than the amount of deductions provided for by clauses 3 and 4 of the considered norm, the person can take advantage of the provisions of clause 7. If after the employer withheld the amounts without taking into account the reduction, excessively deducted funds shall be returned order defined by Article 231.
Conclusion
If in the period the deductions established by sub. 3 or 4 p. 1 of the rule in question cannot be fully used, the balance may be carried forward, unless otherwise provided by this article. For entities receiving pensions under current legislation, a reduction in contributions to the budget may be included in previous years, but not more than three. Moreover, they should immediately precede the period in which the transferred balance appeared. Re-provision of property deductions provided for in sub. 3 and 4 p. 1, Article 220 is not allowed.