Do you know that the cost of building a house can be reduced and done on the basis of the law? In the Tax Code of the Russian Federation, a support measure such as property deduction is intended for working citizens. During the construction of the house and its decoration, the state will return part of the funds, you only need to provide a package of documents to your tax agent.
What is a tax deduction
A tax deduction is part of the tax that is returned to the taxpayer. The Tax Code provides for property tax deductions for the construction of a residential building. Thus, the state seeks to stimulate the construction of new houses, and make ready-made houses and apartments more accessible.
Who can expect to receive a deduction
All working citizens of the Russian Federation, whose income tax is 13%, are entitled to receive a property deduction for building a house. The main thing is that they have Russian citizenship and pay taxes to the treasury, i.e. officially worked in Russia.
They are entitled to a refund in an amount equal to the full income tax rate for the purchase of an IZhS site, for the payment of development work, as well as for the costs of the purchase of building materials.
What are the conditions for its provision
The conditions for providing a tax deduction for the construction of a new house are prescribed in article 220 of the Tax Code. According to the law, it is granted to a citizen for:
- expenses for the development of a house project;
- expenses for the purchase of building materials;
- the cost of paying construction workers, architects and other professionals involved in the construction;
- expenses for connecting to utility networks.
Deductions are provided only for the above costs. For any others that do not fit this description, they will not be provided. You will not be able to get a deduction for the purchased concrete mixer or drill, since they do not belong to any of the above categories.
What documents are needed to receive
In order to exercise your right, you must collect a set of documents proving your identity and right. Below are the documents for the property deduction during the construction of the house, which the tax agent will require from you:
- photocopy of passport;
- TIN;
- an application for a deduction for the construction of a house (this information should be indicated in the document);
- income statement;
- income statement;
- proof of ownership of the plot;
- copy of the certificate for the land;
- copy of the contract with the building contract;
- checks, receipts, any documents confirming the amount of construction costs.
If you have minor children in your family, you must provide another birth certificate for each child. If you have at least one adopted child, you will have to provide a decision of the guardianship authorities that the child is in your care.
Money is not returned in cash or to a personal bank account. They are issued together with wages at the place of work at the cash desk or on a working bank card. Moreover, if you work immediately for 2-3 jobs, you have the right to receive it from all places of work. In this case, copies of the documents should be provided to all employers acting as tax agents.
In accordance with the law, you may not submit a declaration of income. However, this document contains information, the receipt of which by the tax authorities themselves will take some time. To expedite the process of considering the application, it is better to fill out and file the declaration.
Deductions
The amount of the deduction depends on the amount of funds spent on the purchase of building materials, payment of workers and so on. In accordance with the law, you are entitled to a property deduction of up to 2 million rubles. However, if housing is built not for living in it, but for sale, the amount will be no more than 250 thousand rubles, provided that the cost of real estate is less than 1 million rubles. In this case, the time factor should be taken into account. The maximum amount of property deduction for building a house is equal to the amount that was provided for in the month when the balance was formed, carried forward to the following periods.
Property deduction is not provided if housing was purchased or built using maternity capital or employer funds. Also, it is not provided to non-working pensioners, since the pension is not taxed, which means there is nothing to deduct from.
Is it possible to get a deduction for unfinished housing
It often happens that not just a plot or a house plan is acquired, but an already rebuilt or almost rebuilt building. For example, a plot was acquired on which a foundation and a basement have already been erected. Can one then expect to receive a deduction for an unfinished house? The law stipulates that you can get it not only for the purchase of land, but also for an unfinished house, and even for its decoration (if the house is built, but there is no decoration).
Of the funds that the previous owner spent on the construction of a private house, of course, you cannot get a deduction. You will also have to confirm with documents that you received an unfinished house. That is, it makes sense to register all those buildings and document that what was actually done before the acquisition of the house by the previous owner. This must be done immediately after the purchase, so that later there are no misunderstandings when determining the amount of tax deduction for the construction of a new house.
In order to receive a deduction for an unfinished building, it is necessary, in addition to those documents that are handed over when building a house from scratch, to provide an acceptance certificate for unfinished housing. This is true even if you acquired a stake in it.
To obtain a property deduction for building a house, you should contact your employer. If you work in a large enterprise, and you do not have direct access to the head, the application must be submitted to the personnel department. In the case when it is not possible to contact the employer, the application and a package of documents can be submitted at the nearest tax office.
Can I get the deduction again
The law does not provide for a tax deduction repeatedly. Even if you buy another house or change your job, you cannot expect to receive a deduction for building a house for the second time.
Every citizen has the right to receive a property deduction for building a house. The law allows you to use the tax deduction for building a house, for example, another spouse, adults, working children and other family members, but only with their permission.
Is it possible to get a deduction balance
It happens that during the construction of a private house, not the entire amount of the deduction provided by law was spent. For example, during the construction of a house you were able to recover less than 2 million rubles. Then you or someone from your family decided to build another house. Can I use the remaining funds? If you are not engaged in the construction of houses exclusively intended for their subsequent sale, then it is possible, but only within the remaining amount and subject to the conditions specified in article 220 of the Tax Code.
How is the deduction calculated for shared participation in an apartment building
Property tax deductions for construction and decoration can be provided if the taxpayer has a certificate confirming ownership of the purchased housing. It must be provided with the application. Moreover, it can be obtained not only from acquired building materials, but also from interest on a loan if a residential building was erected for the amount received.
With participation in shared construction, you can get it only after the house is put into operation, since only after that a certificate will be issued. Until you have this document, you will not be able to receive a property tax deduction for shared construction. The certificate of ownership is included in the mandatory set of documents, given that so far not everything is clean with construction companies in Russia. If the specified construction period is more than 3 years in the contract, you will not be able to receive a deduction.
Payment Procedure
As soon as the opportunity arises to receive a property deduction during construction, it is necessary to submit a pre-prepared set of documents to the employer or to the tax department. Within 3 months, the tax service will check the documents, and if there is no reason for the refusal, the deduction will be credited and issued along with the salary.
If no decision has been made within 3 months, the taxpayer has the right to demand from the tax service to transfer interest in the amount of the current refinancing rate.
In case of refusal to accrue the deduction due to an incorrectly executed package of documents (there are no references, the wrong data is indicated), the request can be made again.
The tax authorities send the decision to refuse or issue by mail at the place of residence of the taxpayer. Moreover, they must indicate the reason for the refusal to issue a property tax deduction. They must send written explanations to you by mail at the address of residence
Possible problems
When returning funds, problems may arise that will lead to the fact that you lose the opportunity to receive a property deduction:
- Due to the length of construction work. In order to receive a deduction, an acceptance certificate must be provided. If for some reason the construction was delayed for a period of more than 3 years, it will not be possible to get it.
- Delay in the execution of documents confirming ownership. Most often, participants in shared construction are faced with this problem when the construction company cannot put the house into operation at the time indicated in the contract or does not finish the construction at all.
- The occurrence of disputes during the verification of documents by tax authorities. Officials may require additional information or confirmation of the legality of transactions. Sometimes they do not indicate the reasons for the refusal, which is a violation of the law.
- Unscrupulous developers. This is one of the most common reasons tax deductions do not provide. In their desire to earn as much as possible, they often arrange forgery of documents, delay with the deadline for delivery of the object, indicate other prices in the documents.
If the above problems arise, you should contact the court. This is the only way to get the funds due to you by right and to resolve the controversial situation, or at least punish the guilty that you cannot use your right.
Instead of a conclusion
Property tax deductions for building a house are the legal right to refund, if not all the money spent, then at least some of it. Building a house is expensive. If there is an opportunity to save due to tax deductions, it would be irrational not to use it.