How to get mortgage tax deductions? A tax deduction is a way to return some of the money paid to the state in the form of taxes. In Russia, there are many reasons to return part of the money: for example, mortgage borrowers receive such a deduction on an equal basis with those persons who pay for housing with living finances.
How to get mortgage tax deductions? Russians ask this question quite often.
What you need to know about buying an apartment in a mortgage?
So, a mortgage is a financial instrument that benefits only when it is properly managed. From the technical side, the process of buying an apartment in a mortgage is completely simple and consists of five steps:
- A person selects a suitable property that he wants to receive in his property.
- A bank and an appropriate lending program are selected.
- All the necessary documentation is being prepared.
- The prepared contracts are signed.
- A deal is made, and the person becomes the legal owner of the respective housing.
For any questions related to the purchase of an apartment in a mortgage, you can always consult a bank, where specialists will tell you in detail about all the intricacies of how to complete such a transaction. The problem sometimes lies in the fact that when buying an apartment on a mortgage, many citizens make a number of strategic mistakes, which subsequently have to be costly and long to fix. Next, we learn how to get tax deductions for a mortgage and who they rely on.
Interest deduction
Mortgage property buyers may receive a tax deduction on interest on the mortgage and on the cost of housing. It must be borne in mind that since 2014, an amendment to the Tax Code has been in force, which now indicates that interest rates are limited to three million rubles. This circumstance does not apply to those who have such a right before 2014. Thus, starting in 2014, interest deductions are limited to the indicated amount.
An apartment in a mortgage: how to get a tax deduction and what is its size?
The maximum amount of such a deduction today is six hundred fifty thousand rubles. This is thirteen percent of five million. Two of them are the maximum amount of the value of the apartment, which can be presented for deduction. It is worth noting that another three million are the maximum possible amount of interest on a mortgage. The value of “13%” arises here because every month the state takes this particular salary in the form of personal income tax from the Russians.
It is worth considering an example: through a mortgage at a rate of ten percent and an initial installment of twenty, an apartment worth five million rubles is purchased with an installment plan for thirty years. The total interest on the loan will be more than eight million rubles. In this situation, the amount with which it will be possible to receive a deduction according to the existing rules is five million (that is, the maximum stipulated by law).
Not everyone knows how much you can get on a tax deduction for a mortgage of free money.
In this case, this amount will be 650 thousand. With cheaper housing or the most favorable conditions for a mortgage, it will be less. When the full amount of interest paid on a loan is, for example, two and a half million rubles, then the percentage of tax return is 300 thousand rubles.
We continue to understand the issue of how to get a tax deduction for an apartment on a mortgage.
What documents are needed for this?
Documents for obtaining a tax deduction require the following:
- A completed tax return.
- Submission of an application for a tax refund with the details of the account of the institution to which the applicant must transfer the money.
- Issued income statement for the year for which the buyer wishes to return the tax.
- Presentation of a contract for the sale of housing.
- Documentation confirming the date of registration of property rights. In cases of investment in real estate under construction by agreement of equity participation will need an act of transfer of the apartment.
- Papers that confirm payment, namely bank statements or a seller’s receipt (notarized, notarized).
- An additional document for obtaining such a deduction for interest is a mortgage agreement.
- A schedule of loan repayments and interest payments under the contract is provided.
- Bank reference on the actual payment of interest for the year. Each bank is given a certificate in its own form. The main thing is that it should contain the amount of interest paid for the year in rubles.
- Documentation confirming payment (we are talking about cash receipts, receipts, payment orders, statements). Despite the fact that people present a certificate of interest paid, the tax will require the attachment of paper confirming payment. In the event that the documents are not preserved in the bank, you will have to take an additional account statement from which the repayment will be visible.
- In the event of joint ownership, an agreement is necessary on the distribution of the deduction. Notarization of such a paper is not required, the personal presence of another owner is also not necessary.
Also, in some cases, a marriage certificate is required. And if there is shared ownership with the child, a birth certificate will be needed.
How to get a tax deduction from interest on a mortgage, we told. But what if there are several apartments?
Is it possible to receive a deduction at once from two mortgage apartments?
Starting from 2014, deduction limits are determined not per property (for example, per apartment), but per person, that is, directly to the buyer who receives it. Until now, many people believe that only the spouse for whom the property is registered can count on receiving this service. In fact, both husband and wife can file a tax deduction.
In addition, it can be obtained in several apartments. True, the limit of two million rubles applies to absolutely all objects in the aggregate, in this regard, such an innovation is only able to buyers of inexpensive real estate. For example, a person purchased two apartments of one and a half million rubles. Previously, he could receive a deduction only from this amount, and now from two million. In some cases, it can be obtained from three apartments, each of which cost seven hundred thousand.
So, they took a mortgage: when can I get a tax deduction?
Receipt options
There will be two ways to pick it up. The first option is to receive a property deduction in one payment at the end of the year. The entire amount is returned through the tax office. In the process of registration, a tax person will need a declaration. We are talking about the form of 3-personal income tax for the year when the apartment was purchased. After the documentation has passed the due diligence, the applicant receives the returned tax on the personal current account.
On the official portal of the Federal Tax Service there is a video instruction on how to fill out such a declaration. There you can find a deduction form and see approximate filling options.
The second way is registration through the employer. To do this, you should require a tax notice with a document confirming the right to property deduction. After receiving such a notice, the employer will be obliged to pay the person income without deducting thirteen percent of his salary until the end of the calendar year, as well as reimburse the amount previously deducted for the past months.
If you have a mortgage, it’s rather easy for you to get a tax deduction: here it’s only important to act correctly and operate the properly assembled and executed documentation.
Who has the right to deduction?
All tax residents of our country who have income taxed at the thirteen percent rate have this right. You can’t expect to receive this service if the property was purchased from an interdependent individual or in circumstances when it was paid by the employer. In addition, apartments purchased for business are not subject to collection of tax deduction.
When can I get a mortgage tax deduction? For many buyers, refunds usually end with ships. For example, there are cases when one of the clients, who does not understand the nuances, submits documents for a property deduction. At the same time, they transfer money to him, but after two years they demand to return it back. As a result, it may turn out that a person purchases housing on a military mortgage, that is, in fact, the cost could be paid by the state - this is an example of an unsuccessful request for deduction.
How to get a tax deduction when refinancing a mortgage?
Refinancing a mortgage, as a rule, is called a change in a loan agreement or the conclusion of a regular agreement in order to improve lending conditions for borrowers. People usually resort to a refinancing service for various purposes. For example, it can be a decrease in the size of monthly payments, a change in the term of the contract, or a decrease in the interest rate.
The latter condition is currently especially relevant, since financial institutions, following the Central Bank, have been lowering rates for more than a year, and at the same time increasing the number of refinancing programs.
The mortgage portfolio available today (which is about five trillion rubles), which is on the balance sheet of various banks, is formed at an average percentage of 12.5%. Rates at which mortgages are issued have now been reduced to ten percent or less, starting from the beginning of the second half of last year. It is this decrease that forms the demand for all refinancing products.
Is it possible to get a tax deduction on a military mortgage? Let us consider this question in more detail.
More on Military Mortgages
The mechanism for implementing state programs on military mortgages provides for the process of annual accrual of certain amounts of money to the participants' savings account. They can be spent in the form of a down payment for the purchase of an apartment in a mortgage.
In addition, after the purchase of a home, funds continue to flow, in connection with this, the loan can also be serviced using them. As a result, a situation is permissible and often arises in practice in which a transaction on mortgage registration and acquisition of real estate by military personnel is carried out in full at the expense of budgetary funds without additional borrowing directly by the borrower himself. Funds received on a military mortgage may be spent on the purchase of the following real estate options:
- The acquisition of a residential private house.
- Buying an apartment, it does not matter, whether it is the primary or secondary real estate market.
- Communal apartment when it comes to the entire living area.
- Buying a townhouse.
Mortgage to the unemployed
We learn how to get tax deductions for a mortgage to an unemployed: can this be done at all?
The cost of real estate, unfortunately, is increasing every year. Despite the constant rise in prices, people regularly need personal housing. The best option for buying a property is a mortgage, as accumulating the required amount is far from always possible. Mortgage loans can be issued by any domestic bank. At the same time, each of them has its own rules with the terms of registration of contracts. Many of those who plan to purchase real estate are wondering whether it is possible for the unemployed to take a mortgage, and if such an opportunity exists, then how to do it.
So, how can you get a mortgage for an unemployed person or someone who is informally employed and gets his salary in envelopes? It is worth noting that a few years ago mortgages were available only to officially employed citizens, but today the situation has changed dramatically. An increase in the number of credit institutions leads to increased competition between them. For this reason, many organizations have ceased to require documents from their clients confirming income.
In addition, many professions that are in demand at the moment do not oblige people to formal employment at all. In this regard, banking institutions are trying to keep up to date and trying to be loyal to their customers, so now there is the opportunity to take a mortgage for an unemployed person. However, credit state organizations do not issue funds without providing full documentation.
Mortgages for the unemployed can be issued by banking institutions without providing official certificates from the place of work. To obtain the required loan, you can today turn to one of the following three most common options, for example:
- A mortgage is issued to the unemployed in the event that the person who issues the loan acts as an individual entrepreneur or conducts his own private practice. In such a situation, the bank will be satisfied with the separately provided income statement, which you can always take from the tax office.
- One of the most common options for obtaining a mortgage loan is also a guarantee. Friends and relatives may act as guarantors. Banks are provided with those documents that confirm the fact that the guarantors have real estate. The downside is that few people agree to become a surety for another person.
- The provision of payment of half the amount of mortgage lending directly on the day of its registration. The remaining half is divided into parts that need to be repaid within a certain period.
How to get tax deductions for a mortgage is a topical issue today.
When can I get an apartment in a mortgage?
After a person has purchased an apartment using a mortgage, and he becomes the owner, he can get the keys and register in a new place. This must be done within one week from the date of discharge from the previous registration address. It will also be required to inform the HOA of the change of ownership. And we must not forget to pay the required amount on a mortgage of a banking organization every month so that there is no delay. It happens that people miss the next payment, you should not allow this if you took a mortgage.
How to get a tax deduction, and most importantly - when?
Immediately the next year after acquiring an apartment in a mortgage, you can file a tax return and receive the corresponding deduction.