How to get a tax deduction for renovating an apartment or house

A legally savvy homeowner will easily understand how to get a tax deduction for property renovations. But for all other people, such a procedure will become a serious problem. You will have to take into account many pitfalls and nuances of the situation itself:

• what to do if the property belongs to several owners;
• how to receive funds separately from property return after purchase;
• what documents are needed when applying for a military mortgage, etc.

Without a detailed and professional analysis of each issue, it will be difficult to issue a tax deduction for apartment renovation. Therefore, we offer detailed recommendations for completing the procedure.

Conditions

First you need to understand who is entitled to such a benefit. You can count on it:

1. Citizen of the Russian Federation, officially employed and receiving a salary;
2. A person who pays income tax on all types of earnings;
3. An owner of residential property who has not previously received such payment.

All of the above conditions must be met in their entirety. How much you will get back from the funds invested in the renovation depends on the amount spent. It will have to be documented. A tax deduction is allowed for repairs in a new building or in an old house, but this also has its own characteristics. We will talk about each of them below.

Is it possible to receive compensation for repairs separately from property coverage from the purchase of an apartment?

It is not possible to receive a separate deduction for repairs. Repair costs are taken into account as part of the property deduction due for the purchase of an apartment and in total cannot exceed 13 percent of 2 million - this is in the amount of 260 thousand rubles (for example, real estate costs 1.5 million, then you can increase the amount of deduction due to repairs up to 2 million). You can arrange both options if you act correctly. The following points will have to be specified in the housing purchase agreement:

• indicate that the living space is transferred to you without finishing;
• check for the wording “unfinished apartment”;
• there is partial finishing - describe all the work done.

When purchasing real estate in a new building from a developer, you can apply for such a benefit without any special difficulties. The main thing is to draw up the contract correctly. If you are counting on a tax deduction for the renovation of an apartment in a new building that you purchased from someone other than the developer, then difficulties may arise.

Additionally, you should check the list of works according to a special classifier (it is indicated in the Tax Code). It also says that the following expenses may be included in actual costs:

• purchase of materials for interior decoration;
• requesting alteration services;
• development of a project or estimate by third-party specialists.

It turns out that the listed costs can be safely added to the list for personal income tax compensation.

Tax deduction for apartment renovation: how to get 13% back for home decoration

Is it possible to return 13% for repairs, purchase of building materials, and home decoration? In this article we will tell you about the tax deduction for apartment renovation: what conditions must be met, is it possible to get a tax refund for apartment renovation on the secondary market, how to apply for a tax deduction for apartment renovation in a new building, for what repairs and finishing materials can you get a refund - is there a deduction for purchase and installation of plumbing, gas equipment, doors, electric stoves, glazing of windows and balconies, purchase of tools and delivery of building materials).

According to Article 220 of the Tax Code of the Russian Federation, a taxpayer has the right to receive property tax deductions for expenses:

• for new construction or acquisition of residential buildings, apartments, rooms, acquisition of land,
• for repayment of mortgage interest (including when refinancing) on ​​one property no more than the limit established by law.

Is it possible to get a tax deduction for renovating an apartment?

, the following expenses may be included in the actual costs of purchasing real estate

• expenses for the acquisition of an apartment, room or share(s) in them or rights to an apartment, room or share(s) in them in a house under construction;
• expenses for the purchase of finishing materials;
• expenses for work related to the finishing of an apartment, room or share(s) in them, as well as expenses for the development of design and estimate documentation for finishing work.

However, in order to return personal income tax for home decoration, certain conditions must be met.

Conditions for obtaining a tax deduction for apartment renovation

Let's find out what is needed to get a 13 percent refund for apartment renovations. In addition to other conditions (for example, the availability of income), the following must be met:

• the agreement on the basis of which the acquisition of an apartment, room or share (shares) was carried out provides for the acquisition unfinished apartment, room (rights to an apartment, room) without finishing or share (shares) in them;
• the taxpayer must provide documents confirming the expenses incurred by him.

If the finishing of the apartment is partially completed (the apartment is rented with rough finishing), then it is necessary that the documents indicate what work was completed at the time of transfer of the apartment.

It should be noted that the documents should specifically refer to the lack of finishing (and not repairs) (Letter of the Federal Tax Service of the Russian Federation for Moscow dated April 27, 2009 N 20-14/4/ [email protected] ).

In addition, not all finishing work and not all finishing materials can be deducted (read more about this below).

Tax deduction for renovation of an apartment in a new building

Acceptance for deduction of expenses for finishing an apartment in a new building is possible if the agreement on the basis of which such an acquisition was made provides for the acquisition of an unfinished apartment without finishing. The necessary documents for a tax refund for the renovation of an apartment in a new building are a participation agreement in shared construction and a transfer deed or other document on the transfer of the shared construction object by the developer and its acceptance by the participant in shared construction, signed by the parties, as well as payment documents drawn up in the prescribed manner and confirming the expenses by the taxpayer (Letter of the Ministry of Finance of the Russian Federation dated May 19, 2017 N 03-04-05/30993).

It should be borne in mind that if you purchased an unfinished apartment in a new building under a sales contract (in a new house that has already been built), then, in the opinion of the Ministry of Finance, it will not be possible to reimburse the tax for the renovation of the apartment (Letter of the Ministry of Finance of the Russian Federation dated June 10, 2013 N 03 -04-05/21469, Letter of the Ministry of Finance of the Russian Federation dated April 26, 2013 N 03-04-05/14706).

Tax deduction for apartment renovation (secondary housing)

To answer the question “is it possible to get a tax deduction for renovating an apartment on the secondary market?” Let's turn to the law and clarifications of financial authorities. According to paragraphs. 5 paragraph 3 art. 220 of the Tax Code of the Russian Federation “acceptance for deduction of expenses for the completion and finishing of an acquired residential building or a share (shares) in them or the finishing of an acquired apartment, room or share (shares) in them is possible if the agreement on the basis of which such acquisition was made, provides for the acquisition of an unfinished residential building, apartment, room (rights to an apartment, room) without finishing or share(s) in them.” Accordingly, the taxpayer has the right to include in the property tax deduction expenses associated with finishing an apartment only when purchasing an unfinished apartment in a building under construction (Letter of the Federal Tax Service of Russia dated August 15, 2013 No. AC-4-11 / [email protected] , Letter of the Ministry of Finance RF dated April 2, 2010 N 03-04-05/10-161, Letter of the Ministry of Finance of the Russian Federation dated January 25, 2011 N 03-04-05/9-28). Therefore, a tax refund for the renovation of an apartment purchased on the secondary market cannot be made.

Tax deduction amount for apartment renovation

The taxpayer has the right to a property tax deduction regarding the costs of finishing the acquired apartment, if the agreement on the basis of which such acquisition was made provides for the acquisition of an apartment without finishing, taking into account the restriction established by subparagraph 1 of paragraph 3 of Article 220 of the Tax Code of the Russian Federation (Letter of the Ministry of Finance of the Russian Federation dated July 11, 2022 N 03-04-05/48286).

A limit on the size of the tax deduction for the costs of purchasing an apartment (2,000,000 rubles) is established for both the direct purchase costs and the costs of renovating the apartment (the law does not provide for a separate limit for the tax deduction for the repair and decoration of an apartment).

Therefore, the answer to the question “how much can you get back for renovating an apartment” is as follows:

You can return 13% of your costs for renovating an apartment, taking into account the limit of 260 thousand rubles established for the costs of purchasing an apartment (including the costs of decorating a residential premises).

Example

The taxpayer purchased an apartment in a new building without finishing at a cost of 4,000,000 rubles. He received a property tax deduction for the purchase of an apartment in the amount of 2 million rubles. and can no longer return 13% for apartment renovations.

Example

In 2022, the couple bought an apartment in a new building without renovation costing 3,600,000 rubles. They spent another 500,000 rubles on finishing. Each spouse (even if the share of the apartment is registered in the name of a child) will receive a tax deduction for the purchase of an apartment in the amount of 1,800,000 rubles and a tax deduction for renovation of the apartment in the amount of 200,000 rubles.

What kind of repairs can I get a tax deduction for?

Let's find out which finishing materials and repair work can be used to obtain a tax deduction for repairs in a new building - what is included in the costs for reimbursement of 13%.

The Tax Code of the Russian Federation does not contain a definition of the concepts “finishing work” and “finishing materials”. At the same time, the composition of finishing works in construction is defined in the All-Russian Classifier of Types of Economic Activities OK 029-2014 (NACE Rev. 2) in group 43.3 “Construction finishing works”. In this case, finishing materials can include all materials used in the production of the above finishing works.

Thus, the taxpayer has the right to include in the property tax deduction expenses associated with the performance of finishing work and the acquisition of finishing materials in accordance with the list of works classified as finishing work by the above-mentioned All-Russian Classifier of Types of Economic Activities (Letter of the Ministry of Finance of the Russian Federation dated 07/08/15 N 03-04 -05/39414, Letter of the Ministry of Finance of the Russian Federation dated October 7, 2015 N 03-04-05/57182).

At the time of writing, construction finishing works according to OKVED, in particular, include:

• production of plastering works (external and internal plastering works in buildings and structures, including installation of reinforcing mesh);
• carpentry and carpentry work:

- installation work on doors (except automatic and revolving), windows, door and window frames made of wood or other materials;

- installation work on internal stairs, built-in wardrobes, built-in kitchen equipment;

-production of work on the interior decoration of buildings (including ceilings, sliding and removable partitions, etc.);

• work on installation of floor coverings and wall cladding:

- laying, gluing tiles, facing, hanging or assembling any parts of their structures in buildings or structures, including: laying ceramic tiles, concrete covering or cut stone for floors, as well as installing ceramic stoves,

-installation of parquet and other wooden floor coverings, wall cladding with wood,

-laying carpets, linoleum and other materials,

- wall cladding or floor coverings made of natural and artificial stones,

- wallpapering;

• production of painting and glass works;
• production of other finishing and finishing works.

Next, we will answer questions regarding the possibility of obtaining a deduction for repairs for various types of work, services and types of materials and equipment.

Is it possible to get a tax deduction for the delivery of finishing materials?

The costs of delivery (transportation costs) of building materials are not specified in the Tax Code, therefore it will not be possible to return 13% for the delivery of finishing materials (Letter of the Ministry of Finance of Russia dated February 25, 2022 N 03-04-05/12061).

Is it possible to get a tax deduction for glazing a balcony or loggia ?

According to Mifin, expenses for the manufacture, delivery and installation of window units on loggias are not included in the property tax deduction (Letter of the Ministry of Finance of the Russian Federation dated July 26, 2011 N 03-04-05/7-535, Letter of the Ministry of Finance of the Russian Federation dated September 15, 2010 . N 03-04-05/9-545).

Is it possible to return 13% for installing windows (replacing windows) in an apartment?

The costs incurred in connection with the installation of new windows are the costs of home improvement, so it will not be possible to issue a deduction for these costs (Letter of the Federal Tax Service of the Russian Federation of Moscow dated August 23, 2005 No. 28-10/59580).

Is it possible to get a tax refund for the purchase and installation of plumbing fixtures and bathtubs?

It will not be possible to obtain a tax deduction for the purchase of a bathtub, sink, water meters and other sanitary equipment (Letter of the Ministry of Finance of the Russian Federation dated April 28, 2008 No. 03-04-05-01/139, Letter of the Ministry of Finance of the Russian Federation dated July 26, 2011 No. 03- 04-05/7-535, Letter of the Ministry of Finance of the Russian Federation dated January 18, 2012 N 03-04-05/7-28, Letter of the Federal Tax Service for Moscow dated September 9, 2011 N 20-14/4/087757. Letter of the Federal Tax Service RF dated 04/06/2011 N KE-4-3/ [email protected] , Letter of the Ministry of Finance of Russia dated 01/20/2011 N 03-04-05/9-15, Letter of the Ministry of Finance dated 05/28/2013 No. 03-04-05/19322 ).

Is it possible to get a tax deduction for installing interior doors ?

The costs of finishing an apartment purchased without finishing, for which a property tax deduction is provided, include, among other things, the costs of purchasing and installing interior doors (Letter of the Ministry of Finance of the Russian Federation dated October 28, 2008 N 3-5-04 / [email protected ] Letter of the Federal Tax Service for Moscow dated September 9, 2011 N 20-14/4/087757).

Can I get a tax deduction for buying tools?

No, it will not be possible to reimburse the tax for the purchase of tools (for example, for the purchase of a chainsaw, electric planer, jigsaw, etc.) (Letter of the Ministry of Finance of the Russian Federation dated October 14, 2011 No. 03-04-05/9-733).

In addition, according to explanations from financial authorities, it will not be possible to obtain a tax deduction for expenses on:

• purchase and installation of an electric meter and a water meter (Letter of the Federal Tax Service of the Russian Federation dated 04/06/2011 N KE-4-3/ [email protected] , Letter of the Ministry of Finance of the Russian Federation dated May 28, 2013 N 03-04-05/19322),
• purchase and installation of gas equipment (Letter of the Ministry of Finance dated August 24, 2010 N 03-04-05/9-492 Letter of the Ministry of Finance of the Russian Federation dated July 26, 2011 N 03-04-05/7-535),
• purchase of an electric stove (Letter of the Federal Tax Service of Russia dated June 25, 2009 N 3-5-04/ [email protected] , Letter of the Ministry of Finance of the Russian Federation dated April 28, 2008 No. 03-04-05-01/139),
• installation of electrical wiring, switches, sockets (Letter of the Ministry of Finance of the Russian Federation dated May 28, 2013 N 03-04-05/19322),
• installation of heated floors (Letter of the Federal Tax Service of Moscow dated August 23, 2005 No. 28-10/59580),
• sound insulation of walls (Letter of the Federal Tax Service of Moscow dated August 23, 2005 No. 28-10/59580),
• installation of split systems (Letter of the Ministry of Finance of the Russian Federation dated May 28, 2013 N 03-04-05/19322),
• installation of a water heater (Letter of the Ministry of Finance of the Russian Federation dated May 28, 2013 N 03-04-05/19322).

Not for every apartment renovation you can get 13 percent back.
How to get a tax deduction for apartment renovation

A 13 percent refund for apartment renovation is possible upon submission of the necessary documents to the tax office at the place of registration. It should be remembered that you can receive a property tax deduction when acquiring rights to an apartment in a house under construction starting from the tax period (year) in which the apartment was transferred by the developer and accepted by you as a participant in shared construction on the basis of a transfer deed or other document on the transfer of the shared construction object , signed by the parties (Letter of the Ministry of Finance of the Russian Federation dated July 12, 2019 N 03-04-05/51765).

There are two ways to receive a deduction for home decoration:

• through the tax office

In order to return money for apartment renovation through the tax office, you must submit the relevant documents to the Federal Tax Service at the end of the year for which you want to refund the tax. A desk audit will begin, upon completion of which and upon confirmation of your right to deduction, the estimated tax amount will be transferred to your current account (you can read more about the timing of the transfer of money here).

• through the employer

Without waiting for the end of the year, you can receive a deduction for repairing an apartment in a new building at your place of work. In this case, you will still have to contact the tax office. But the number of documents submitted to the Federal Tax Service is decreasing (you can learn more about receiving a property deduction through an employer from this article).

Tax deduction for renovation of an apartment in a new building: what documents are needed

To return PFDL for apartment renovation, the following must be submitted to the tax office:

• tax return in form 3-NDFL (original),
• application for refund of overpaid tax (original). From 2022, taxpayers have the right to submit an application for a credit (refund) of the amount of overpaid tax as part of their tax return,
• DDU agreement with appendices and additional agreements thereto (copy),
• a document confirming the transfer of the apartment by the developer to the participant in shared construction (for example, an acceptance certificate) (copy),
• contract for finishing work (copy),
• payment documents (copy),
• certificate 2-NDFL (original).

Let us separately dwell on the documents confirming the purchase of building materials.

According to subparagraph 7 of paragraph 3 of Article 220 of the Tax Code of the Russian Federation, a property tax deduction is provided on the basis of payment documents drawn up in the prescribed manner and confirming expenses incurred by the taxpayer:

• receipts for receipt orders,
• bank statements about the transfer of funds from the buyer’s account to the seller’s account,
• sales and cash receipts,
• acts on the purchase of materials from individuals indicating the address and passport details of the seller,
• and other documents.

On the issue of the possibility of using a sales receipt to confirm taxpayer expenses, the Ministry of Finance spoke as follows. A sales receipt for the supply of construction and finishing materials issued by a trading organization to the buyer (an individual without indicating his last name, first name and patronymic) can be accepted as a document confirming the taxpayer’s expenses for the purpose of providing a property tax deduction, if there is a cash receipt, testifying to his payment of funds for purchased construction and finishing materials (Letter of the Ministry of Finance of the Russian Federation dated January 13, 2012 N 03-04-05/7-7).

Is it possible to first receive a tax deduction for the purchase of an apartment, and later return 13% for renovating the apartment?

Yes, you have the right to additionally declare expenses for finishing the apartment not only in the year you purchased the apartment, but also later - as repair work is completed.

Previously, the Federal Tax Service, when purchasing an apartment before 2014, refused to refund the tax for repairs if in the previous tax period the taxpayer had already been provided with a property tax deduction in respect of the same property upon its acquisition. The additional deduction for apartment renovations declared by the taxpayer was considered repeated (Letter of the Federal Tax Service of Russia dated 04/30/2013 N ED-4-3/ [email protected] , Letter of the Ministry of Finance of the Russian Federation dated January 10, 2013 N 03-04-05/7-4). However, in connection with the approval by the Presidium of the Supreme Court of the Russian Federation on October 21, 2015 of the “Review of the practice of courts considering cases related to the application of Chapter 23 of the Tax Code of the Russian Federation” (hereinafter referred to as the Review), the position on this issue has changed (Letter of the Federal Tax Service of Russia dated December 25, 2015 N BS-4-11/ [email protected] , Letter of the Federal Tax Service of Russia dated November 3, 2015 N SA-4-7/ [email protected] ).

Therefore, at the moment we can be guided by the legal positions set out in the Review. From the content of these provisions of Article 220 of the Tax Code, it follows that the scope of the property tax deduction may include various expenses of a citizen associated with the acquisition of real estate and arising more than once. At the same time, the deduction claimed in relation to one piece of real estate is not repeated, but in relation to different costs included in the actual costs of its acquisition. Consequently, the fact that the taxpayer began completing the construction and finishing of an unfinished residential building not in the same tax period in which he acquired this property, claiming a property tax deduction for such expenses in subsequent tax periods, does not indicate the repeated nature of the deduction , and could not be the basis for refusal to apply it (clause 17 of the “Review of the practice of consideration by courts of cases related to the application of Chapter 23 of the Tax Code of the Russian Federation” (approved by the Presidium of the Supreme Court of the Russian Federation on October 21, 2015)).

You can find out about the statute of limitations for tax refunds on expenses for purchasing an apartment (including income tax refunds for apartment renovations) here.

If the apartment was purchased at the expense of budget funds, and the finishing work was carried out at the expense of one’s own funds

A property tax deduction can be provided only for expenses that were made at the expense of the taxpayer’s own (personal) funds without attracting budget funds received as part of the program to support young families (the deduction is not provided for the amount of maternity capital). Therefore, the taxpayer has the right to a property tax deduction regarding the costs of finishing the acquired apartment, made at the expense of the taxpayer’s own (personal) funds, if the agreement on the basis of which such acquisition was made provides for the acquisition of an apartment without finishing, subject to confirmation of such right by the relevant documents (Letter of the Ministry of Finance of the Russian Federation dated October 25, 2018 N 03-04-05/76722).

So, by applying for a tax deduction for apartment renovation, you can return up to 13% of the costs incurred. However, in order to receive a tax refund for home decoration, certain conditions must be met. Thus, an agreement for the purchase of an apartment must provide for the purchase of an unfinished apartment, room (rights to an apartment, room) without finishing, so it will not be possible to obtain a tax deduction for the renovation of secondary housing. In addition, tax refunds are not possible for every finishing work and finishing materials. You can receive a tax deduction for renovating an apartment in a new building both through the Federal Tax Service and through the employer when submitting the necessary documents.

Posted by:

Ralenko Anton Andreevich

Moscow 2019

What objects are payments made for?

To apply for a tax deduction for the renovation of a house or other residential property, certain conditions must be met. The circumstances of the work, as well as the type of object, also matter.

1. When purchasing housing on the secondary market or in a new building from a developer or realtor, reimbursement of expenses incurred for remodeling is allowed.
2. If you purchase real estate from close relatives (1st and 2nd degree of relationship), you can’t count on a personal income tax refund.
3. When buying housing from people with a distant degree of relationship, funds are paid in the general manner if you prove the legal right to provide them.
4. There are no restrictions on cost, although the amount of coverage cannot exceed the value specified by law - 2 million.
5. Receive a tax deduction for home repairs (a private house or cottage), if the documentation indicates a house and not a building. Moreover, the object should be considered unfinished.
6. If you are building a house yourself, after registering the rights to it (while continuing to decorate the premises), you can include expenses in covering construction costs.

In general, each situation must be considered separately. There are other nuances with real estate that you need to remember when applying for compensation.

Legislation

Buying a home in a new building involves additional construction or repair work: houses are usually delivered in a rough finish. This factor encourages citizens to apply for income tax compensation:

1. Article 220 confirms the possibility of returning personal income tax.
2. pp. 2 p. 1 art. 220 of the Tax Code of the Russian Federation establishes the amount of the amount that will be returned. Its maximum is 13% of 2 million rubles.
3. Paragraph 12 of subparagraph 2 of paragraph 1 of Article 220 of the Tax Code provides a list of expenses subject to reimbursement.
4. Finishing, its absence and other concepts of preparation for repairs are discussed in detail by Rosstat order No. 344 dated 08/30/11.
5. Apartments are purchased both in new buildings and on the secondary market. According to the letter of the Ministry of Finance dated April 20, 2012 No. 03-04-05/9-538, buyers in the second case also have the right to a refund for repairs.
6. Letter of the Ministry of Finance dated July 26, 2011 No. 03-04-05/7-535 informs about door costs.
7. The list of repair and finishing works for which subsidies are received is stated in letters of the Ministry of Finance dated 01/17/12 No. 03-04-08/7-3, 07.17.12 No. 03-04-05/7-878, 07.08.15 No. 03 -04-05/39414.

Important! The deduction for carrying out communications to a private house is drawn up in accordance with paragraphs. 3 p. 3 art. 220 Tax Code of the Russian Federation.

Is it possible to return 13% for renovations in a secondary apartment?

It is possible to receive a tax deduction for the renovation of a secondary apartment, but it is important to take into account some specific features of the situation. Lawyers recognize this procedure as the most problematic - usually in such objects, repair work was carried out by the previous owners. And no matter what quality they were, refinishing is not considered when issuing funds.

In order for the money to be paid to you, you need to purchase housing where the premises have not yet been finished. This is often possible by entering into a purchase agreement with a reseller. But even here you will have to collect a bunch of papers in order to pay a tax deduction for the repair of secondary housing. It is worth enlisting the support of an intelligent lawyer in advance.

Please note that the contract of sale or assignment of claims must indicate that the object is being purchased with rough finishing.

Conditions for including finishing work in property deductions

Property tax deduction for an unfinished apartment is provided subject to the following conditions:

1. The apartment was purchased in a new building directly from the developer. If you bought an apartment from a private person, even if it was the first owner and did not carry out any work, it will be impossible to deduct finishing costs.
2. The purchase and sale agreement states that the apartment is sold without finishing. This is a must. The wording “unfinished apartment” is acceptable in documents. If the finishing was partial, it is necessary to list which works were included in the price of the apartment and which were not. A deduction can only be obtained for the cost of work performed by the owner, and not the developer.
3. The tax is refunded only for finishing work. You cannot return money for apartment renovations. For the legislator, the terms “repair” and “finishing” are not the same thing. Therefore, when you collect documents and fill out a declaration, carefully ensure that the work and materials are indicated in the documents as finishing.

You cannot return tax on the costs of finishing an apartment purchased on the secondary market.

For which houses can you get a deduction for repairs?

When it comes to private buildings, and not about living space in apartment buildings, there are certain nuances of obtaining compensation for alterations to housing. There are two situations worth considering.

1. Purchasing a house from another owner.
   If the documents indicate that you bought an unfinished residential building, then the costs for its completion are taken into account as part of the property compensation for personal income tax. When the agreement for the purchase of housing does not contain a clause that it is unfinished, then even with a complete renovation it will not be possible to return the tax deduction for repairs.
2. Building a new house on your own
   . Having completed the registration steps, you continue to complete the construction of the property or decorate it - include the costs in the property coverage for personal income tax.

It turns out that you can compensate for the costs not only of finishing and repairing an old house. In the case of a new building, this is also allowed. The main thing is to properly prepare for receiving funds.

What does rough finishing mean and where should it be written down?

To apply for a tax deduction for apartment renovation, secondary housing must be properly registered. It is especially worth paying attention to such a nuance as rough finishing. Often, information about the presence or absence of such is indicated in the agreement on the purchase of living space or in the DDU.

Recommended article: Mortgage for a single mother with children, on maternity leave, divorce

It is necessary to include information that the living space does not have interior decoration in a separate clause of the agreement. And it is advisable to list in detail the characteristics of the property. The rough finish itself suggests that:

• main entrance door installed;
• there are windows and a glazed balcony;
• sometimes there are partitions between rooms;
• there is a sewer system, but no plumbing;
• electricity is not supplied to the apartment;
• pipelines are blocked, etc.

Take this into account when applying for a tax deduction for repair costs. This list can also include the lack of a finished floor, wallpaper, switches and sockets, lighting fixtures, etc.

For what work is personal income tax reimbursement paid?

Much in this matter depends not on actual expenses, but on the literacy of paperwork. The more receipts, checks and other evidence of expenses you collect, the more money you will be able to recover (the maximum amount of reimbursement is limited by law). And to understand what is included in the tax deduction for repairs, you need to start with building materials. The process takes into account:

• how much was spent on the total cost estimate;
• what funds were spent on materials for the attic, veranda, etc.;
• carrying out communications such as telephone, gas, heating, etc.;
• plastering surfaces, whitewashing, installing skirting boards and other finishing;
• wooden panels, components, nails, etc.

It is important to indicate in the documents what materials were required for certain types of work and how exactly they were used. If you ordered the design of a future remodel, then the costs should include contacting the design bureau. But you need to collect supporting documentation.

Clause 3 of Article 220 of the Tax Code of the Russian Federation on tax deductions

Even if you know how to get a tax deduction for apartment renovations, remember that such benefits are not provided automatically. They must be applied for, confirming the final amount of compensation with the relevant authorities. If you need to return funds for developing a project, provide an agreement with experts and receipts confirming payment for services. If you want to get money for building materials, collect evidence of their purchase and use. This is the only way to provide a tax deduction when purchasing an apartment and renovating premises.

Property deduction for finishing an apartment

According to abc. 12 subp. 2 p. 1 art. 220 of the Tax Code of the Russian Federation, the actual costs of purchasing an apartment, room or share(s) can include:

• expenses for the acquisition of an apartment, room or share(s) in them or rights to an apartment, room in a house under construction;
• expenses for the purchase of finishing materials;
• expenses for work related to finishing the apartment, as well as expenses for developing design estimates for finishing work.

However, expenses for finishing an apartment can be deducted only if the share participation agreement specifies the acquisition of an unfinished apartment (rights to an apartment) without finishing or a share(s) in it

.

If it is impossible to determine under the contract that an unfinished apartment is being purchased, and also if the contract does not indicate that it was purchased without finishing, then the tax inspectors will refuse a deduction for finishing.

The Ministry of Finance of Russia reminds us of this in letter dated August 6, 2022 No. 03-04-05/63167.

Apartment finishing works include, in particular:

• plastering works;
• carpentry and joinery work;
• interior decoration;
• wall cladding/covering, floor covering;
• installation of windows, window frames, doors.

Please note that it is not possible to take into account costs associated with the redevelopment and reconstruction of premises, the purchase of plumbing and other equipment, registration of transactions, etc.

Read in the berator “Practical Encyclopedia of an Accountant”

Simplified property deduction

Compensation amount, calculation example

The total amount is determined based on actual expenses for finishing work, supported by documents. The law limits the maximum amount of compensation. It is 13% of the costs incurred, but not more than 260 thousand rubles per person (that’s thirteen percent of two million). When housing is purchased through mortgage lending, funds are calculated taking into account the interest on the loan.

It is important to make a note in the documents that the purchased property has not been finished. Then a tax deduction for apartment renovation will be paid.

If we are talking about new real estate, then in the act of transferring it to the owner, you need to indicate the percentage of readiness of the premises and a list of improvements necessary to complete construction work. It is better to consider the method of calculating a certain amount of coverage using an example.

A citizen purchases a one-room apartment for 1,700,000 rubles. Then repair and finishing work is carried out at a cost of 200,000 rubles, and furniture is purchased for another 150,000 rubles. It will not be possible to receive funds for pieces of furniture, and therefore it is better to eliminate these expenses immediately. As a result, the amount from which the property tax deduction for apartment renovation is calculated is 1,900,000 (1,700,000 + 200,000) rubles. Subtract 13% from it, and you get 247,000 rubles. This will be the final amount of compensation.

What documentation is required to apply for benefits?

You need to start the procedure for receiving funds by collecting a minimum package of papers. When they are ready, go to the authorized authorities. In a standard situation, you need to collect the following documents for a tax deduction for repairs:

• confirmation of income (form 2NDFL);
• 3NDFL declaration and a copy of the housing purchase agreement;
• all acts and certificates proving rights to real estate;
• checks and other similar papers;
• application, TIN and passport of the applicant.

When submitting repair receipts for tax deduction, be sure to include specific materials. If there are invoices or an agreement with the construction company, attach them too. The certificate confirming the applicant's income will have to be marked with the seal of the employing company. This document must bear the signature of the manager.

The certificate and declaration are provided only in originals. And all contracts must be copied. Moreover, the agreement confirming the purchase of the object must contain information that it was transferred to the new owner without finishing. The application must indicate the details of the account to which the funds will be credited. One of the shareholders is a minor; a birth certificate of such an owner will be required.

Recommended article: Tax deduction when buying a second apartment

In order to easily receive a tax deduction for home renovation, you need to pay special attention to filling out the 3-NDFL declaration (Instructions for filling out 3NDFL). It will take approximately three months to check the package of documents and application. The Federal Tax Service found inaccuracies or the necessary paper is missing - they will refuse compensation. The payments themselves are made in stages.

Extracts from the Unified State Register, certificates, acts of transfer of an object, etc. are used as documents confirming ownership rights. If you have taken out a mortgage loan with a bank, you will have to attach the corresponding agreement. It is advisable to take with you not only copies, but also originals. Although a lot depends on through which authority you submit the package of papers.

List of documents

To receive benefits for finishing work when purchasing real estate in a new building, you need to collect a package of documents:

• passport of a citizen of the Russian Federation;
• TIN;
• declaration;
• statement;
• income certificate (2-NDFL);
• contract of sale;
• act of acceptance and transfer of ownership of housing;
• payment papers (checks, receipts, etc.);
• birth certificate (if there are minor children among the owners).

One of the most important documents is Form 3-NDFL. It is filled out according to all the necessary data and without errors. Copies of documents are submitted to the Federal Tax Service, but take the originals with you.

For reference! Accrued funds are returned in parts, over several months or years. This depends on the applicant's earnings.

Where to apply for tax benefits

Knowing how to return a tax deduction for apartment renovation, you also need to understand which department to apply for such a payment. The only authority is the Federal Tax Service, but there are different options for receiving funds.

1. You can submit your application and papers directly to the tax authorities. Then you will need proof of income (2NDFL) and a declaration (3NDFL). The application must indicate the account details where the specific amount will be transferred.
2. The second option is to apply through your employer. Then you won’t have to confirm your income and fill out a declaration. Along with the rest of the papers, you should come to the Federal Tax Service. After consideration of the application (within a month), a notification will be provided here. It is sent to the accounting department of the company where the applicant works. In this case, obtaining a tax deduction for apartment renovation is possible by refusing to pay 13% income tax.

1. Or you can submit an appeal through the State Services portal. You only need to register, prepare the above documents (the declaration is filled out online), and fill out the application through your personal account.

In the first case, you can send an application to the Federal Tax Service in person, by mail or through a representative. But you will have to obtain a certificate from your place of work yourself. To eliminate the risk of refusal, you should first consult with a lawyer.

Tax refund for apartment renovation

There are several ways to process tax payments for construction work on purchased property.

Papers are sent to NI in person and by mail (registered mail). The period for consideration of the application and processing of documentation is 3 months in both cases. It will take another month to transfer money to a current account (bank card), its number must be indicated in the application. The statement describes the desire to receive compensation for the purchase of an apartment and the improvement of living conditions carried out in it. In addition, a declaration is filled out in accordance with the law, all documents from the above list are attached. The funds will be transferred in a one-time payment or divided into parts (over several months or years depending on earnings). In practice, the waiting period is shorter.

The procedure for submitting documents and receiving benefits through the employer is slightly different. First of all, a citizen must submit an application to the Federal Tax Service and obtain permission for a subsidy. The application is considered for a month. After a positive decision and receipt of notification, the employee collects the same papers as the tax office, with the exception of the declaration and income certificate. The entire package is handed over to an accountant or employer, and after a thorough check, monthly payments are made (funds that were withheld to pay personal income tax).

Another way to get a refund for purchasing an apartment and construction work is through the State Services portal. The list of documents, the period for consideration and transfer of benefits is the same as in the Federal Tax Service. The main thing is to make high-quality scans of all papers, fill out the declaration correctly, and draw up an application. The entire path of the appeal can be tracked through the taxpayer’s account from submission to receipt of the refund.

In a new building

Living space purchased in a new house may be without renovation, with rough or fine finishing. The requirements for returning subsidies are slightly different. Let's take a closer look.

The apartment is unfinished, or “rough”. These cases are the most profitable, since receiving compensation will not be a problem, the main condition is that the papers are filled out correctly:

1. The purchase and sale agreement states that the property was purchased without finishing.
2. This information is attached to the declaration.
3. A list of work carried out and materials purchased is attached, the data is supported by invoices.
4. In case of shared ownership, one owner applies for a tax deduction, and the rest give their consent to this (in writing).

Partial finishing will bring a little more hassle during registration, since the inspector must see exactly what work was performed and whether it is included in the list of paid ones. You must provide the following information:

1. Indicate what exactly was not produced by the developer.
2. The transfer and acceptance certificate indicates the work to be performed by the owner.
3. Funds spent on the purchase of furniture and plumbing cannot be returned.

Attention! An apartment with a fine finish is not included in the refund for repairs.

Secondary market

Resale is, as a rule, finished housing purchased from another owner. If a “custom” repair or simple transformation is carried out, then it will not be possible to return the money for it. But there is still a nuance that allows you to issue a refund.

When purchasing, the seller specifies in the contract the construction work that the buyer will have to carry out. If they are included in the legal list, then the return of benefits is possible.

There is no specific deadline for the return of compensation for the transformation, since the property deduction for the purchase and repair of property is issued together, no matter how long it takes.

When will a deduction for repairs be denied?

If you already understand how to get a tax deduction for home renovations, you need to find out in what cases this will not be possible.

1. Most often, they are denied when the applicant cannot confirm the right to such compensation, or the documents are incorrectly drawn up or one of them is missing.
2. When purchasing residential space on the secondary market with renovation, it will not be possible to obtain a 13% personal income tax refund, even if the existing finishing does not suit the new owner.
3. When housing was purchased from close relatives of the first and second stages, you cannot count on compensation either.
4. If the contract for the purchase of a private house does not indicate that you purchased an unfinished property, then a refund of the tax deduction for repairs is impossible.
5. Additional problems will arise for unemployed citizens, pensioners, or parents on maternity leave. Although some of them are resolved within the framework of the law.
6. Other situations where there are discrepancies with the law or the requirements for an applicant to receive coverage.

In other cases, you can safely count on the successful consideration of the application by the Federal Tax Service.

Deduction for apartment renovation on the secondary market: nuances

In many cases, a citizen who bought an apartment on the secondary market subsequently carries out repairs on it. Will he be able to include the costs of the corresponding repairs in his tax deduction?

This depends on the following factors:

1. From whether the apartment was cleaned until the moment of sale. If it has been carried out, then the housing is considered completely ready for use, and therefore the costs of repairing it cannot be included in the deduction.
2. It depends on whether it is stated in the housing purchase and sale agreement that the apartment is not ready for full use and requires repairs. If the appropriate wording is present in the contract, and they are legal (that is, the apartment was not actually renovated), then subsequent repair costs can be included in the deduction amount. A similar scenario is possible if a person built an apartment with a rough finish under an equity participation agreement, and then decided to resell it, but by that time had not made repairs in the final finishing format to the apartment.

The fact that the apartment, in principle, belongs to the secondary market - that is, is resold, does not matter. The main thing is the fact that repairs were carried out or not carried out in it at the time of concluding the purchase and sale agreement between the previous owner and the buyer, as well as the reflection in this agreement of the fact that the apartment was not fully finished.

How quickly are funds transferred and where?

If you were able to obtain a tax deduction for the renovation of a new apartment or other home, you will have to wait until the entire amount is in your account. Sometimes the procedure lasts for years, but much here depends on the salary of the person applying - the higher the salary, the greater the lump sum compensation. The amount paid cannot exceed the applicant's monthly income.

When calculating the timing and frequency of payments, the citizen’s annual income is taken into account:

• the official salary for the year is 2,000,000 - the entire amount is paid at once in one payment;
• the official salary is slightly more than a million rubles - payments are divided over two years (the exact terms depend on the base amount);
• income not exceeding 1,000,000 rubles - the tax deduction for the renovation of a purchased apartment is divided into three years or a longer period.

For example, if a citizen’s salary is 60 thousand rubles per month, the maximum possible compensation (260 thousand rubles) is paid for five years. For four years the applicant will receive 60,000, and in the last year he will be paid the balance - 20,000 rubles.

Funds are transferred to the bank account specified in the application. Or it is possible to abolish income tax (13%) for a certain period. For all years included in it, the citizen will not pay this fee to the Federal Tax Service.

Recommended article: Tax deduction for mortgage life insurance

How to compensate for 13% personal income tax if maternity capital was used during the purchase

In any case, you need to take into account the costs of renovating your apartment for tax deductions. But in the situation with maternity capital, everything turns out differently. The Tax Code of the Russian Federation states that material assistance from the state is not subject to a 13 percent tax, which means there is simply nothing to return if you spent maternity capital on finishing.

But sometimes it is possible to cover the costs. It is transferred to the family’s account, taking into account the previously paid personal income tax on the purchase of real estate. To apply for a tax deduction refund for the renovation of an apartment and its purchase, you will have to meet standard conditions (availability of an official salary, Russian citizenship, etc.).

The total amount is calculated minus funds invested from maternity capital. It turns out that if housing cost 2,000,000 rubles, approximately half a million in state aid must be subtracted from this amount, and 13% must be calculated from the remaining 1.5 million.

What are the conditions for receiving a deduction for repairs?

Property tax deduction in accordance with the legislation of the Russian Federation is provided to citizens who purchased at their own expense (that is, without using, for example, a state subsidy or employer funds) residential real estate, and also carried out the necessary repairs in it, again at their own expense. work.

The amount of the corresponding deduction is calculated:

• based on the cost of housing under a purchase and sale agreement (or a contract for shared construction or conventional construction);
• based on the confirmed expenses of the buyer of the apartment for finishing the home.

The total amount of expenses from which the deduction can be calculated can be 2,000,000 rubles. The maximum amount of property deduction, which is provided for by the legislation of the Russian Federation, is therefore 260,000 rubles (13% of 2,000,000).

If an apartment was purchased by a citizen using a mortgage loan, the deduction can also be calculated from expenses represented by the amounts of interest paid on the corresponding loan.

However, the use of these privileges in practice is characterized by a number of nuances. Namely:

1. In order to include repair costs in the total deduction amount, the real estate purchase and sale agreement (or other contract on the basis of which a person acquires ownership of a home) must explicitly state that no repairs have been made to the property. That is, the housing does not have a fine finish.

So, if a person purchases a new apartment under a contract, then the following can be recorded in the transfer and acceptance certificate of the corresponding property:

• percentage of housing readiness;
• a list of improvements that need to be made in order to bring the housing to readiness.

If the contract between the seller or builder and the buyer of the apartment does not reflect the fact that it requires repairs based on certain criteria, then the Tax Inspectorate (FTS) will most likely refuse to include the citizen’s expenses for repairs in the amount , according to which the property deduction is calculated.

1. Repair costs may include:

• cost of finishing materials;
• the cost of repair work ordered from a specialized company or private contractors;
• the cost of services of a specialized company for the development of design documentation for repairs.

Repair costs cannot include the cost of plumbing, furniture, and building materials used in remodeling the apartment (if it was carried out). The fact is that these items are used for the purpose of improving housing, and not for repairs carried out in order to prepare the property for use (this is the main criterion for finishing - bringing the apartment to a form suitable for human habitation).

1. Repair costs must be declared immediately at the time of the first application to the Federal Tax Service, minus the deduction. The amount from which the deduction is calculated must therefore be calculated based on a one-time summation of all the citizen’s expenses - for the purchase of housing and for repairs.

It is worth noting that it is not at all necessary to carry out repairs before a certificate of ownership of the home is issued. The corresponding work can be carried out later, and the costs for it, one way or another, will be legitimately included in the amount from which the deduction will be calculated. But an application for this deduction, of course, should be submitted only upon completion of the repairs.

Is it possible to get money if the apartment is registered to a spouse who is on maternity leave?

One of the conditions for obtaining a tax deduction for materials for apartment renovation is the presence of an official salary and work. But while on maternity leave, the young mother has no income. Therefore, if real estate was acquired during marriage, the following have the right to apply for compensation:

• father of the family, if there are sufficient grounds;
• spouse, at the end of maternity leave.

At the same time, it is worth taking into account the clarifications of the Ministry of Finance, which states that in this case it will not be possible to receive a double standard deduction. All due to one parent being on maternity leave and lack of regular income.

To receive a tax deduction for building materials in a new building, you need to submit the documentation listed above. The final package includes: confirmation of the purchase of materials, a housing purchase agreement, papers for the applicant, etc. If a marriage contract is concluded between the spouses, which provides for other rules for the division of property, then a copy of it must be added to the list of documents. The procedure for paying compensation will be regulated by this agreement.

Is it possible to receive personal income tax compensation for a pensioner or an officially unemployed person?

Considering that the deduction for repairs and decoration of an apartment is a refund of taxes paid by a citizen, usually no payment is made to the unemployed. Work experience does not affect the provision of compensation. Even if a person got a job for the first time a month ago, he will be refunded personal income tax in the amount paid. In the case of the unemployed and pensioners, the situation must be considered individually.

1. You can return 13% for repairs in a new building when it comes to persons carrying out activities under a contract.
2. When a citizen regularly pays personal income tax (from the sale of property, renting out an apartment, etc.), even without being officially employed, he has the right to count on compensation.
3. If in the future a pensioner or unemployed person receives a position in a company, he will be able to count on this benefit (13% return).
4. Pensioners return personal income tax for the past three years, while other categories do not have similar rights.

None of the options suits you - it is permissible to apply for such coverage for an employed relative. But here we are talking about common property.

What to do if the apartment was purchased with a military mortgage

According to the law, when using someone else's funds (sponsor, employer, etc.) to purchase housing, a refund of personal income tax paid is impossible. Military mortgage involves the use of funds allocated from the savings-mortgage program (NIP). This means that when purchasing real estate, a serviceman does not spend his own money, which means he should not expect a return.

However, there are cases when you can count on such payments.

1. Provide a package of documents containing a list of finishing materials for tax deduction, proving that your own funds were spent on their payment.
2. The cost of housing in the mortgage agreement is greater than the amount of compensation under the NIP - 13% of personal income tax is returned from the difference between the two amounts.

Having in hand documents proving one of the above facts, you can count on tax benefits in the form of a 13% refund. Otherwise the procedure remains standard.

Rate the author

(
1 ratings, average: 5.00 out of 5)
Share on social networks

Author:

Mortgage specialist Maria Yurievna Sokhan

Publication dateJuly 17, 2019October 25, 2019