As you know, income from the sale of apartments by individuals is subject to personal income tax - personal income tax. When buying and selling housing on the territory of the Russian Federation, it is in all cases paid to the Russian budget, even if this transaction is made by citizens of other countries.
The mentioned area of ââlegal transactions is so diverse and saturated that it can be described only by an impressive multi-volume. This article pursues a much narrower goal: to reveal some features of the sale of apartments by citizens if this property has been in their property for less than three years.
From a legal point of view, the period of preliminary ownership of an apartment before its sale is important in view of the different assessment of the tax base. Such a precedent is peculiar precisely to Russian legislation. In the USA, for example, such a deal is not taxed at all (is this not one of the reasons for the real estate crisis that broke out in 2007?), Western Europe, on the contrary, takes a tougher approach. The tax code of the Russian Federation by its clause 17.1 of Art. 217 potentially exempts from the income tax the vast majority of Russians - property owners who have been such for three years or more.
However, with shorter ownership of the same tax code (Article 208, paragraph 1, paragraph 5), the legal situation is fixed when the sale of an apartment is taxable. Less than 3 years of ownership entails two alternative options for determining the amount of income tax (PIT), both with a rate of 13% for the sale of apartments, which we will consider later. Incidentally, in France, tax authorities have acted much tougher. There, when selling an apartment during the year after its purchase, such a budget income will amount to one third of its value.
The economic reason for differentiation
Why does the state demonstrate such a different approach in determining the tax base, taking as a guideline such a seemingly non-economic indicator as the tenure? Why are tax officials taken for a landmark period of three years?
It is much more profitable for the owner of the apartment, if she does not like it, to wait more than three years, and then sell to buy a new one, leaving all the proceeds with her. Indeed, the "classic" owner does just that. But the real estate speculator thinks differently. For him, buying and selling apartments is a business. Through the tax code, the Russian state not only limits the profitability of such speculations, but also keeps their records, at the same time attracting funds to the budget.
Taxation options
The âshort-termâ owner has the right to choose how it will be more profitable for him to be taxed on income (personal income tax) for the sale of an apartment. Less than 3 years of ownership - this period legally defines two ways to determine the base of this tax in this situation. As already mentioned, the tax rate for both options is 13%.
The first option involves the subject of taxation of the net income of the owner as the difference between the purchase price and the sale price. For example, the owner bought an apartment for 1.4 million rubles, and sold for 1.9 million rubles. The ownerâs net income of 0.5 million rubles was provided by this apartment sale. Less than 3 years of ownership - a circumstance that reduces the benefit by the amount of tax: (1900 - 1400) * 13% = 65 thousand rubles.
In the second option, if an apartment was acquired free of charge, the taxation base is its sale price, reduced by 1 million rubles (Article 220, paragraph 1, paragraph 1 of paragraph 1 of the Tax Code). The Federal Tax Service of Russia by letter No. ED-4-3 / 13578 of 07.25.2013 systematizes the procedure for determining the amount of deduction from the tax base of net income.
Suppose that the proceeds from the sale of an apartment amounted to 1.7 million rubles. The owner who sold it must pay to the budget the amount of (1700 - 1000) * 13% = 91 thousand rubles.
Another tax deduction option
In a situation where the owner of the apartment invested more than 1 million rubles in his repair, buying and selling an apartment for him may be accompanied by another way to reduce the tax base. According to Art. 220 of the Tax Code of the Russian Federation, he has the right to reduce the amount of income received by actually incurred, as well as documented expenses.
What the illegal âtax optimization" leads to
Unfortunately, it happens that apartment owners in collusion with realtors and a buyer intentionally underestimate their market price, and often illegally âoptimizeâ tax deductions. What is the danger for dodgers? The tax service, having determined the fact of understating the value, is entitled through the court to break the deal - to return the apartment to the owner. In addition, an adequate notary has the right to refuse to register a contract of sale.
Resident - non-resident
The above tax rates apply to residents, that is, for people who live in Russia 183 days a year. The absolute majority of them are Russian citizens.
On the other hand, non-residents - foreigners and Russian citizens living mainly abroad, can own and dispose of apartments as property. For them, the sale of apartments is taxed at an increased rate of more than twice as much: 30%.
Moreover, for non-residents, the three-year period is not even mentioned by the tax code. Letâs say more, no matter how much time their housing belongs to: three years or fifteen to twenty years, the tax rate remains unchanged. Suppose an apartment was bought for 5.0 million rubles, then a non-resident sold it for 6.5 million rubles. In this case, the amount of income tax (PIT), which should be paid to the budget to a non-resident, will be (6500 - 5000) * 30% = 450 thousand rubles.
The moment of acquisition of ownership
As we can see, the term of ownership determines the amount of tax payable when an apartment is sold. Less than 3 years of ownership are not defined as three calendar years, but as 36 months, starting from a very specific date. What circumstances determine when a property right is acquired? In the case when it is acquired through privatization, signing a contract of gift, purchase, sale, barter, rent, as compensation for a demolished house, the date of registration of this right is the date of registration of the certificate of ownership.
The starting point for the acquisition of this right for the recipient of the inheritance is the death of the testator. The owner of cooperative housing may call himself its owner only on the day of the final payment of the share.
Thus, the sale of an apartment as a transaction is always commensurate with the time of the onset of ownership.
Clarification: this is not only about the apartment
When selling their apartments, cottages, garden houses, summer cottages, land for development, rooms in apartments are equal to apartments regarding the application of personal income tax, and the latter are only whole (legal term), that is, having their own number, for example: room number 1 in apartment number 7. This means that the transaction of sale of an apartment is legally standard. To all of the above real estate, the rates of the Tax Code already mentioned by us are applicable.
But if each room is not registered under its own number, then the situation described below is quite possible. Let's say there are 4 rooms in an apartment, each of them is owned by a separate person. Then everyone sold their rooms, each for about 1.0 million rubles. The tax authority testifies that in such a situation, the value of all apartments is added up to determine the total selling price. In this case, the sale of the apartment will be subject to personal income tax as follows: (4 * 1000-1000) * 13% = 390 thousand rubles. Each seller will pay income tax as Âź of the cumulatively accrued amount of 390: 4 = 97.5 thousand rubles.
Find an apartment to buy - a problem?
Finding the ârightâ apartment to buy is troublesome. At first glance, the supply of the housing market is replete with a variety of offers. However, if you really begin to call up with the persons who have advertised, then you will find out very soon: they are in no hurry to give the number of the house where the apartment is located. The latter means that you are talking with intermediaries in the housing market, that is, with realtors. Often, buyers are interested in the sale of apartments from the owners. But is it always justified?
On the one hand, of course, itâs good that the housing market is structured and professionals work on it. This can save the parties to the transaction from illegal schemes that could lead to its termination. Of course, for this security you have to pay an intermediary - a real estate agency. Here are the approximate prices for âconfidence and calmâ: audit of the legality of the transaction - from 10 thousand rubles .; registration of ownership of housing - from 15 thousand rubles., "turnkey transaction" - from 20 thousand rubles. Indeed, there is some common sense in the fact that a person who is not daily connected with the legal side of transactions addresses realtors.
Independent apartment search
However, a certain category of legally literate fellow citizens is still attracted by the opportunity to save money by making a deal without the services of realtors. Selling apartments from owners is more rare in the market, it must be sought. The easiest way to pay attention to the purchase of apartments in the primary market, that is, from the developer. At the same time, in order to avoid misunderstanding, first you need to figure out which class of housing the house under construction or built belongs to: VIP-, classic- or economy class. This can be determined by the method of commissioning (turnkey or self-finishing), the area of ââapartments of the housing stock, the prevalence of multi-room apartments in it. Find out which developers are building housing in your city. Inquire about their reputation and track record.
Selling apartments from owners in the secondary housing market, as we have already mentioned, is more rare. But the enthusiasts of its search are not discouraged: before they find it, they go in and update the information on the AVITO website hundreds of times, more often it takes several days to search for it, buy newspapers with ads, âring the phone numbersâ of the owners of the ads and find ...
However, it is not a fact that a âsuccessful finderâ of a home buyer will more than pay its owner over the market price the amount that a realtor would charge him. It is no secret that apartment owners often overstate their price. However, for a âreal buyerâ the sale of secondary apartments is also not a Turkish letter.
If it is decided to buy an apartment in a âforeignâ city, then cautious people in these circumstances prefer to act only through an intermediary, but not independently. At the same time, the probability of possible âsurprisesâ is minimized.
Legal actions when buying an apartment
We transfer the emphasis from a review of the specifics of the Tax Code, taking into account residency, preferential terms, tax rates, tax deductions for the sale of apartments, on the purely legal formalities of this transaction.
Let's start by buying an apartment, because this is the first step of the beneficiary. On his part three blocks of actions are supposed.
First, the buyer checks the sellerâs documents and puts a signature on the preliminary contract.
Then (if the transaction occurs in the secondary market) signs an alienation agreement. In the case when there is a purchase of an apartment in a new building (primary market), the act of acceptance is subject to signature (perhaps, instead of it - a preliminary contract governing the investment contribution, shared construction, unit-based construction).
The last stage is state registration of the transaction. For the buyer it is fundamentally important to carefully carry out all these stages. Moreover, special cases deserve special attention when an urgent sale of apartments is made.
Signs of Fraud
Fraudsters usually try to make the sale process vain, trying to hide the essential details. If such events begin to take place, and the seller is trying to rush you, do not be shy, abruptly interrupt cooperation and say to him: âGoodbye!â - it will protect you from costs.
As you know, money loves silence. Carefully read the original sales contract registered by a notary. Even if you previously deducted his draft contract, a sample purchase and sale of an apartment. Be vigilant - especially regarding the final text printed by a notary.
Preliminary agreement
At the first stage, the buyer first determines the price, and then examines the completeness of the package of sales documents. The buyer should analyze the presented technical characteristics (form No. 7), the registration of tenants in the apartment, a document providing ownership of it (contract of sale, privatization, donation).
In more detail, the package of documents for the purchase must be completed with the following documents:
- application for state registration of the apartment;
- contract of sale (it determines the timing of the sale of the apartment);
- BTI documents - an explication and a phased plan of the apartment;
- a copy of the applicant's passport document;
- receipt of payment.
Let's start with the secondary market. Particular attention should be paid to the possibility of various problematic situations in the future. This refers to the following clarification of circumstances:
- whether the property being sold is under arrest;
- whether the expression of will has been previously taken from all the heirs - consent to the sale;
- whether the rights of persons living in the apartment are violated.
In the primary real estate market, the developer sells the apartment. What documents are needed in this case? Pay attention to the construction schedule when the deadline for putting the apartment into operation is planned. In this case, there should be no significant difference with the degree of readiness of the object for delivery. Inquire about the business reputation of the organization-builder, whether there is "on her conscience" long-term construction. Next, documents that display:
- state registration of the lease of a building plot (possibly ownership of it);
- the right of the builder to build;
- agreement on raising funds, investment contract;
- plan for the provision of apartments.
For better understanding with the seller, it is advisable to obtain reliable contact information from him (referring to the online mode), as well as verbally negotiate with him the estimated terms of the sale of the apartment, taking into account the unhurried, high-quality execution of all its stages.
Alienation contract or acceptance certificate as the second stage of the purchase of an apartment
Only after a quality preliminary check can you take on the second stage of the purchase: the signing of the contract of sale. It doesnât matter if a notary was present at the signing of this agreement, however, an acceptance certificate must be required or an alienation agreement signed at the first stage.
Let us draw your attention to the technical detail: the sale price of the apartment is indicated in the alienation contract, it is a component of the calculation of the tax base - personal income tax when selling an apartment.
The moment of the actual transfer of the apartment is essentially contractual, it can (by agreement of the seller and the buyer) be chosen alternatively:
- as the moment of signing the contract of sale;
- correlated with its state registration;
- the acquisition of a certificate of ownership of the apartment.
Conclusion
Analysis of the housing market in Russia reveals some positive trends. This is noted and recognized by his analysts, in particular a professor at the University. Plekhanova Gennady Moiseevich Sternik. Firstly, the state policy of regulating prices gives tangible results.
In the long run, there is a gradual stabilization of prices with an orientation to their pre-crisis level, which is truly economically justified. In the short-term there is a tendency to stagnation (meaning price fluctuations around the weighted average by +/- 2.5%). The stable ruble exchange rate affects the appraisal of apartments: it is already customary that their prices have become ârubleâ. Significantly activates the housing market mortgage. For example, in 2012, mortgage loans worth over 1.0 trillion were issued to the population. rub.
However, if we distract from this definitely positive dynamics towards the security of the real estate market itself, we should note the risks that arise when buying apartments without intermediaries. Often non-professionals do not know the specific nuances of buying and selling an apartment. In the vocabulary of specialists, such transactions are called âunprotectedâ.Due to the critical importance of adhering to the legal aspect of the sale, we strongly recommend contacting real estate professionals. Whether itâs selling an apartment that has been in the property for less than 3 years, or another purchase â selling a home, the wages of specialists will still be several orders of magnitude cheaper than the risk of direct loss.