Tax deduction when purchasing an apartment in common joint ownership

Who has the right to a property deduction?

A Russian who pays taxes to the state budget can apply for a deduction. The category of citizens entitled to it includes:

• Persons who have official earnings and pay income tax on it. Individual entrepreneurs operating under tax regimes that provide for other types of payments will not be able to receive a deduction.
• Pensioners with monthly official income subject to a 13 percent tax. This includes real estate rental, tutoring, and nanny services.
• Parents who bought residential premises for minor children and have official earnings, from which personal income tax is levied.

A person who does not work, does not have official income from which taxes can be levied, or evades obligations cannot count on obtaining a property tax deduction.

Important! When purchasing a home before going on maternity leave, a tax deduction is issued taking into account the amount of earnings before maternity leave. The remainder of the payment is made after resumption of work.

What deductions are due to spouses when buying an apartment?

When a family purchases housing, it becomes a joint property of the spouses. It makes no difference who contributed funds to what extent and for whom the certificate of entitlement was issued. For husband or wife - it doesn’t matter. The house or apartment is shared.

When purchasing housing, there are two forms of return:

1. For the cost of purchasing an apartment. The payment limit per person is set at 2,000,000 rubles. The number of properties purchased can be any. The remainder of the limit is transferred to other apartments that can be purchased in the future.
2. For mortgage interest. The deduction limit is set at 3,000,000 rubles. The object of the deduction can be one apartment or house. The balance is not transferred to other objects.

Both spouses can claim their right to deductions once. But provided that they both pay personal income tax to the state budget or will do so.

Which spouse is entitled to a tax deduction?

Buying an apartment can be done in different ways. Here are the most popular options:

• common joint property (without indicating the size of shares) with the apartment registered in the name of only one of the spouses, or for each of them;
• shared property indicating the size of the share of each spouse.

In all situations, both husband and wife receive the right to deduction. Of course, provided that each of them has such a right in principle. That is, they did not use the deduction in the past, the apartment was not purchased with state money. budget, maternity capital or from a close relative.

The total deduction amount is equal to the cost of purchasing a home. For example, rooms, houses, apartments. But its maximum size is limited by law. The deduction for each buyer cannot exceed 2 million rubles.

How is the deduction distributed between spouses?

When purchasing an apartment in common ownership, a tax deduction for the purchase of housing up to 2,000,000 rubles is given to a husband and wife. This requires them to submit an application to share their expenses.

Previously, until 2014, deductions for property acquired as joint or shared property were distributed between spouses. Currently, the Tax Code does not contain provisions for such distribution. Therefore, when purchasing housing after 2014, there are no grounds for strict distribution of the deduction.

All co-owners can take advantage of the deduction for the purchase of an apartment. The deduction is provided in accordance with the amount of expenses of the husband and wife. They must be confirmed by official payment documentation.

It is necessary to submit a statement of desire to distribute the deduction for the purchase of residential premises in any shares, based on the established limit of 2,000,000 rubles per person. Spouses can divide the deduction between themselves as they wish.

Example 1.

The house costs 3,500,000 rubles. The wife can declare 2 million, and the husband one and a half. Or vice versa. Or in equal shares - 1,700,000 rubles each. In any case, the state will return a total of 455 thousand rubles. And the remainder of the payment will be transferred to other real estate properties.

Example 2.

The apartment was bought during marriage for 5 million rubles. Each spouse can apply for a deduction of 2 million rubles. The tax refund for each is 260,000 rubles, that is, for two – 520,000 rubles.

Example 3.

The couple bought a studio apartment for 2,000,000 rubles. The wife can fully use the right to deduction, and the husband can use it when purchasing another home. Or everyone can receive a payment from a million, and receive the rest later, for example, when building a cottage. You can return 260,000 rubles from the expenses incurred to purchase this apartment, and the remaining 260 thousand later - from other housing.

Important! The home purchase deduction is separate from and unrelated to the mortgage interest deduction.

The Ministry of Finance clarifies that spouses must establish an agreement in advance and once on the proportions of distribution of the property deduction. This must be done before your tax refund. It cannot be redistributed after the registration procedure has begun. That is, the tax will be returned in those shares that the spouses agreed on in advance, for example, in a marriage contract.

Tax deduction for joint common property

According to the tax code, namely Article 220 of the Tax Code of the Russian Federation, when purchasing real estate, the state returns 13% of the value of the property to the owners of this property, but not more than 2,000,000 rubles. from part of the main cost of housing, as well as 13% from the cost of mortgage interest.

The tax deduction for the joint value of the property will be divided in accordance with the “Application for the distribution of shares” submitted to the territorial tax authority.

If one of the spouses expresses a desire to receive a tax deduction unilaterally, indicates this in the application and the second spouse signs this application, then the entire tax deduction will be issued to 1 of the spouses.

Starting with real estate acquired in ownership since 2014 (the certificate is dated 2014), if one of the spouses did not manage to take advantage of the property tax deduction (gave up his right), then in subsequent years, when purchasing other real estate, he will be able to apply for the deduction for himself. Those. his right to receive a property tax deduction is not lost.

For example: An apartment was purchased as a common joint property. The cost of the apartment under the purchase and sale agreement is RUB 4,500,000. Consequently, spouses have the right to return 13% of RUB 2,000,000. Since the property is common and the shares are not distributed in percentage terms, they can receive 2,000,000 in any ratio by distributing these amounts among themselves and indicating them in the Statement on the distribution of shares. And also one of the spouses has the right to renounce his share and grant this right to his (her) spouse.

Receiving a deduction for spouses for mortgage interest

13% of the mortgage interest is also due to the wife and husband. The maximum payment amount is 3 million rubles based on the amount of interest actually paid.

Important! The balance of the mortgage interest deduction cannot be carried over to other properties. But it can be redistributed again annually.

Example.

The Ivanovs paid 300,000 rubles in mortgage interest for 2022. At the family council, it was decided that the tax refund in 2019 would be received by the wife. And in 2022, they will divide all the interest in half and each return the tax to themselves. To do this, you only need to submit an application for a new redistribution of the balance.

You can divide it between each other as the spouses wish. Until the moment when the total amount of mortgage interest paid is 3 million rubles for the husband and the same for the wife. Not just three million, not for one mortgage, not for one home - but for each spouse. That is, in total the family will be able to claim a six-million deduction, returning up to 780,000 rubles in tax.

Important! A re-deduction for mortgage interest is not possible if the husband or wife previously received it but did not fully use it. It is advisable to consider in advance who will exercise the right. Perhaps it will be the wife, and the husband will receive his payment when purchasing a second home with a mortgage.

How is the tax deduction distributed when purchasing property in joint ownership?

When purchasing property in common ownership, each spouse can apply for a deduction of 2 million rubles, that is, each of the married purchasers can additionally return up to 260 thousand rubles.

By default, the deduction is divided equally between the purchasers in a ratio of 50% to 50%.

If necessary, the shared distribution of the deduction can be changed by the spouses to any value, even 100% to 0%. A change in the shared deduction occurs by submitting a corresponding application to the tax office by both spouses. Please note that this application can only be submitted once. It is not possible to change the share deduction ratio again.

Examples of tax deduction calculations

• In 2022, the couple bought a house, acquired as common property, for 5 million rubles. The cost of the house is more than 4 million rubles, therefore both husband and wife have the right to apply a deduction to the maximum extent - from 2 million rubles for each (260 thousand rubles to be returned). Accordingly, the total tax deduction for the family will be 520 thousand rubles.
• In 2022, the couple bought an apartment for 3 million rubles. The spouses decided to distribute the deduction shares as follows: 2 million - for the husband (to be returned - 260 thousand rubles), 1 million - for his wife (130 thousand rubles). If in the future the family acquires other real estate to which the rules for applying tax deductions apply, the wife will be able to receive an additional refund of 1 million, that is, 130 thousand rubles.

Is it possible to transfer the right to receive a deduction or waive it?

The right to deduction cannot be transferred to another person or renounced in favor of another person.

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Registration of deductions for children by spouses

When buying real estate for a child, parents spend their own or borrowed money on it and allocate a share in the property to the minor. This way they become eligible to use the child deduction. Mom and dad need to decide in advance who will return 13% for the child.

The minor retains the right to receive payment in the future.

Example 1.

There are 4 people in the Tsvetkov family, two of them are minor children. They bought a house for 4 million rubles and distributed 1/5 of the share to each family member. Everyone has the right to deduct from 1 million. The parents decided to take out a payment for the children, which increases the total amount of the deduction to the full cost of the house. The tax refund will be 520 thousand rubles - 260 thousand each for the father and mother.

Example 2.

Husband and wife Petrov and their minor daughter became the owners of an apartment for 3,000,000 rubles. Each of them has the right to return tax on one million rubles. The couple agreed that the father would receive payment for the child. He will be able to get back 260,000 rubles, and his wife 130,000 rubles.

Example 3.

The Ilyins bought an apartment for 1,700,000 rubles. Of these, 1,300,000 rubles were contributed from personal savings, and 400,000 from maternity capital. The spouses will return the tax on 1,300,000 rubles.

Important! When using a family capital certificate to purchase housing, the amount of funds from it is excluded from the total expenses for the apartment. The right to deduction applies only to personal money. They do not include various government support measures.

When applying for a property deduction for a child, you must present a certificate of family composition and a birth certificate to the tax office. If there are individual circumstances, the Federal Tax Service may require the submission of additional documents.

Distribution of deductions between spouses

When purchasing an apartment in joint ownership, the law allows the deduction amount to be distributed between spouses in the proportion that they agree on. It doesn’t matter how the purchase is made (for one or for two). Expenses can be divided 50/50 or in any other proportion. For example, the husband 70% of the total cost of the apartment, and the wife 30%. Or the wife is 100%, and the husband is 0%.

For such distribution, a special document is drawn up - Agreement on the distribution of property tax deduction (see the link for a sample).

You need to distribute the deduction if the apartment costs less than 4 million rubles. Otherwise, no distribution is necessary. In such a situation, each spouse claims a deduction in its maximum amount - 2 million. If the value of the property is less than 4 million, then it is important to understand which of them will receive a deduction and in what amount.

The most profitable option is to provide the maximum amount to the one who receives the highest official income. This will help return the maximum amount of money to the family.

Example A husband and wife bought an apartment as joint property. Each of them received the right to a deduction.

Situation 1 The total cost of the apartment is RUB 5,500,000. In this situation, each of them has the right to claim a deduction in its maximum amount - 2,000,000 rubles. No agreement needed.

Situation 2 The total cost of the apartment is 3,500,000 rubles. In this situation, everyone will not be able to receive the maximum deduction. It is necessary to divide 3.5 million between husband and wife in any proportion and draw up an Agreement.

Let's assume that the husband officially earns more than his wife. Then the maximum amount can be distributed in his favor - 2 million, and the wife will receive the remaining amount - 1.5 million (3.5 million - 2 million).

Since the wife received a deduction of only 1.5 million, she will be able to get the remaining amount (0.5 million) when purchasing another residential property. For example, dachas or houses.

Situation 3 The total cost of the apartment is 1,800,000 rubles. Here you need to divide 1.8 million between husband and wife and draw up an Agreement. For example:

• in favor of the husband 1.5 million, and in favor of the wife - 0.3 million;
• in favor of husband and wife 0.9 million each, etc.

As in situation 2, each of them will be able to “get” the deduction amount when purchasing another residential property.

The distribution is meaningless if one spouse is not eligible for the deduction. For example, they have already used it before. In this situation, it can be claimed by the second spouse in the amount of the total amount of purchase expenses (but not more than 2 million rubles).

Where to apply for a deduction

You need to file a refund with the Federal Tax Service or your employer. You can declare your right at your place of employment without waiting for the end of the calendar year. Personal income tax of 13% will not be withheld from wages. If the deduction is not fully used in the current year, you will need to go through the registration procedure again next year. You will need to submit an application annually until you receive the full amount of compensation.

You will need to wait until the end of the calendar year to receive your refund through the tax office. You can get 13% for the last year or three previous years. The amount of the deduction cannot be higher than the taxes paid to the budget for the corresponding period. If it is more than the expected compensation, then you can first return the tax on the purchase of real estate. And next year - from the mortgage interest paid. Every year you will have to repeat the procedure until all deductions are fully refunded.

To the employer

If you want to receive payments from an official employer, you will need to visit the tax office with the necessary package of documents. There you need to fill out an application for issuing a tax deduction notice at your place of work, and then pick up the original document. The Federal Tax Service will issue it within one month. With the notification, you need to come to work and write an application for compensation.

When all the necessary paperwork is completed, the employee will no longer be charged 13 percent income tax on wages until the end of the current year.

At the tax office

When applying for a tax deduction for common joint property through the tax office, you will need to prepare in advance the details of the bank account to which the payment will be transferred. If compensation is issued for a child, you must present his birth certificate. Spouses who decide to redistribute the payment must write a corresponding application if the cost of the apartment is less than 4 million rubles.

Important! If the spouses purchased an apartment before January 1, 2014, then an application for redistribution is necessary in any case, regardless of the price of housing.

When photocopies of all documentation are submitted to the tax office, it is mandatory to present the originals to the inspector. You can send a package of papers by Russian Post by registered mail with an attached dispatch list or through your personal account in electronic form.

Verification of documents by the Federal Tax Service takes up to three calendar months. Very rarely, the tax office may call property owners to clarify any points or check the originals.

If a positive decision is made after the inspection, the documentation is transferred to the debt settlement department, which transfers the refund. Within 30 days from the date of completion of the registration procedure, the transfer will be made to the current account specified in the application.

The tax service is obliged to notify the taxpayer of the reason for refusing payment if a negative decision is made. Within 10 days, a report on the results of the desk audit must be delivered in person or sent by mail, explaining the reason for the refusal.

Documents required to apply for a deduction for joint property

Before starting the registration procedure, you must collect a package of documentation. It should include the following documents:

• Photocopies of the main page of the passport and the registration sheet.
• TIN.
• An extract from the Unified State Register of Real Estate or a certificate of state registration of property rights.
• The original certificate in form 2-NDFL, received at the place of official employment for the calendar period for which it is planned to receive compensation.
• To receive payment through the Federal Tax Service, you will need a 3-NDFL declaration. The original is served. You can view a sample of how to fill it out on the official tax office website. You can generate a declaration in special paid programs.
• Application for distribution of deductions.
• Contract of purchase and sale of housing.
• Loan agreement.
• Mortgage repayment schedule.
• Certificate of acceptance and delivery of an apartment in a new building.
• A report on the interest actually paid for the use of loan funds.
• Payment documents confirming the deposit of money into the current account from which the mortgage was written off (bank statement or cash receipts).

When buying a home with personal funds, you must present receipts, an extract of a non-cash transfer from the buyer’s bank account to the seller’s account. A receipt for receipt of money will be required when paying for the apartment in cash.

Reasons for refusal to provide a property deduction

The right to receive a refund of taxes paid to the budget may be denied for several reasons. This may happen in the following cases:

• The right to deduction has been used previously.
• Purchasing residential premises using state social support programs without investing personal finances.
• Purchasing real estate with the inclusion of maternity capital.
• Payment for office housing by the employer.
• Purchasing an apartment from an interdependent person - spouse, mother, father, sister, brother, guardian and ward.
• The owner of the property is a non-resident of Russia.
• The house or apartments were not purchased in the Russian Federation.
• Purchasing a property that is not eligible for a tax deduction.

A tax deduction for joint property of spouses is an excellent way to return significant funds and improve the financial situation of the family. From all of the above, several general conclusions can be drawn:

• Both spouses can receive a tax refund when purchasing a home.
• Compensation for one person is 260 thousand rubles.
• One or both parents can receive payment for a child.
• The amount of compensation is limited to the amount of personal income tax paid for the relevant period.
• One of the spouses may refuse the deduction in favor of the other spouse.
• The refund is made in the form of a transfer to the account of the property owner or a reduction in the tax base by the employer.

It is important to remember that the registration procedure can take considerable time. Therefore, spouses must collect the necessary documentation in advance and decide on the distribution of tax deductions when purchasing a home.

Distribution of property deduction for shared property of spouses

Until January 1, 2014, the distribution of property deductions between spouses was carried out in strict accordance with the size of the share of each co-owner in the common property. Now this norm does not apply - spouses have the right to apply a deduction in proportion to the shares of ownership or in another amount by mutual agreement, both when purchasing real estate and when selling it (clause 3, clause 2, article 220 of the Tax Code of the Russian Federation).

The possibility of declaring a property deduction for one object by both spouses at the same time is stated in the letter of the Ministry of Finance dated April 20, 2015 No. 03-04-05/22246. The agency emphasizes that in real estate transactions, tax benefits can be issued in several ways:

• one of the spouses claims the right to deduction, but the amount to be reimbursed should not exceed the legal limit;
• spouses claim a deduction for one item in equal shares;
• the deduction is distributed in accordance with the share of ownership of the property;
• the distribution is carried out without reference to the share in the property; in this case, the agreements of the spouses on the ratio of deductions must be reflected in the application for the distribution of deductions.

Since real estate acquired during marriage is the common joint property of the spouses, a property deduction can be provided to both owners. The Letter of the Ministry of Finance dated November 14, 2017 No. GD-4-11/ [email protected] states that spouses, when claiming a property deduction for a joint property, before the entire tax is returned, can make changes to previously filed declarations 3 -NDFL and adjust the text of the application for distribution of deductions. Only the size of the deduction available to each of them cannot be changed; it is calculated by finding the difference between its maximum value (2 million rubles) and the size of similar deductions applied on the current date.

A property deduction when purchasing an apartment by spouses can be claimed in full by both owners, but provided that they have not previously exhausted the limit for such a deduction.