Tax refund when buying a car: is it possible to get 13 percent back on a car purchase?

Every Russian with income is required to pay a certain percentage of its amount to the state budget. At the same time, Russian legislation, like the legal system of most European countries, provides citizens with the right to a tax deduction - the taxpayer has the opportunity to return part of the costs incurred, for example, on education, healthcare or the purchase of property. Is a car included in the list of purchases for which you can get a tax deduction in 2022?

Is it possible to get income tax back on a car purchase?

There is a misconception that when buying a car you can get 13 percent back. In fact, the right to a 13% refund applies to those citizens who purchased real estate, paid for education or medical services. Since the car is not on the list of essential items, it is not eligible for a 13% refund.

Tax benefits for a car are established when it is sold and income is received from the transaction. For each profit from the sale of property, you must pay 13% income tax. But if the vehicle has been owned for at least 3 years, then you do not need to pay personal income tax, just like you do not need to prepare a declaration to the Federal Tax Service.

The period is calculated as follows:

• when purchasing – from the moment of completion of the purchase and sale transaction;
• in case of inheritance - from the date of death of the testator;
• in the case of a gift agreement - from the moment of signing this agreement.

How a buyer can save

Despite the impossibility of returning personal income tax in the general manner, there are situations when you can save money by purchasing a vehicle of any category.

Important!

It should be remembered that the taxable base is considered not just the amount received during the sale of property, but precisely the final income of the citizen, i.e. he will need to pay 13% of the difference between the purchase costs and the proceeds from the sale of the purchased object (Article 210 of the Tax Code of the Russian Federation).

Selling a purchased property without making a profit during the tax period is perhaps the best option for saving money. This opportunity appears to the car owner when paying a tax accrued on the difference in the value of the car at the date of its alienation and its value at the time of purchase by the former owner.

In this case, personal income tax will be calculated simply: “sale price” minus “initial purchase price” multiplied by 13%. This method can only be used if there are all saved sales contracts, and the revenue and expenses must relate to the same vehicle. If the car was alienated for a lower value, no tax is paid.

Who is entitled to a 13% interest refund?

A bill is being considered in the State Duma that proposes introducing a new personal income tax deduction in the amount of 13% of the amount of expenses for purchasing a car. It is assumed that the deduction will be available to citizens who purchased a new (not used) Russian-made passenger car for family or personal needs. The total amount of expenses is strictly up to 1 million rubles. The largest planned deduction amount is 100 thousand rubles.

If the bill is adopted, then taxpayers will be able to return 13 thousand rubles from the budget.

The following rule was also established: if a person took advantage of such a deduction, he will be able to receive it again in the future, but at least 5 years must pass from the date of the previous application for a refund.

This law is attractive to the state in the sense that it will encourage citizens to purchase domestic cars, developing the Russian automobile industry.

Return of personal income tax in 2022

Discussions about the return of tax deductions when purchasing a car have been circulating in the State Duma for a long time.

In 2022, only a refund is available in all of the above cases, for example, when purchasing an apartment, a citizen who regularly pays taxes can return 13% of the amount of the purchased housing, but not more than 260 thousand rubles.

Even if a vehicle is purchased on credit, a person cannot submit documents to the tax office to have part of the expenses reimbursed.

The Tax Code of the Russian Federation contains clarifications that an individual may qualify for payment if he needs:

• Pay off interest on a loan issued for the purchase of land or construction of a house.
• Buy a house, apartment or share in a residential building.
• To purchase a plot for individual housing construction and build a house.

According to the existing norms of the Tax Code, a property deduction is provided only when real estate, houses of different categories and land are listed.

An individual cannot demand a reduction in the tax burden and a refund of part of the funds paid when purchasing a car. For the simple reason that there is no such provision in the law.

But there is a small nuance here. to receive a tax deduction when buying a car on credit or for cash, but it is legally permitted to issue a personal income tax deduction if the car is sold.

In other words, having sold a car, a person can demand the percentage that he paid as tax upon purchase (13%).

To do this, you need to provide the Tax Code of the Russian Federation with documents confirming the purchase and sale transaction for the specified amount of the car.

Tax deduction for an apartment with a mortgage: documents, how to get it.

How is the deduction amount calculated?

If the taxpayer purchased an apartment, a private house, paid for construction or took out a loan for these purchases - up to 2 million rubles, then an amount of up to 260 thousand (13% of the purchase price) is returned.

Such calculations do not work with a car, since there is no deduction for the vehicle.

How to get 13 percent back from buying an apartment

Calculation example

If a person sold a car for 300 thousand rubles, but the certificates and papers confirming the purchase were lost, then it is possible to use a deduction of 250 thousand rubles and pay 13% on 50 thousand (300 – 250 = 50). If there is documentation (for example, the car was purchased for 280 thousand), then 13% is calculated from 20 thousand rubles (300 – 280 = 20).

Why is there no tax deduction when buying a car?

Either the legislator underestimates the role of the car in modern life, its influence on the development of the transport system, or considers cars a luxury and not a necessity.
Yes, and the transfer of ownership is just as complicated as with housing: the same registration, the same state fees, queues, etc. By the way, the costs are comparable. Transactions involving the equivalent exchange of a car for an apartment or vice versa are not uncommon. But the fact remains a fact and we will firmly emphasize it once again: the legislation does not provide for a property tax deduction for the purchase of a car.

Basic options for saving

1. If the vehicle was sold for an amount of up to 250 thousand rubles, then the profit received is not subject to taxation - despite the fact that the seller made a profit. But if you owned the car for less than 3 years, you will still need to send a declaration to the Federal Tax Service. At the same time, it is not recommended to deliberately underestimate the cost of a car - Federal Tax Service employees will detect this and bring the violator to justice.

2. If the seller has owned the car for more than 3 years, he does not need to pay tax.

3. If the car was owned for less than 3 years, you will need to send a 3-NDFL declaration indicating the sale price. If there are documents that confirm the sale of a car is more expensive than its purchase, then the seller pays 13% personal income tax on the difference.

Offsetting as a way to save

If in the past year a person sold a car and bought property, then you can use mutual deduction - mutual coverage of one tax by the second. If you purchased housing for 1.5 million rubles and sold a car for the same amount, you must pay 13% from the sale of the car, and then return it as a deduction from the purchased apartment.

You can use the mutual deduction only 1 time.

Legislation

You can find the answer in the Tax Code of the Russian Federation:

1. In paragraph 1 of Art. 220 of the Tax Code of the Russian Federation contains a list of property for which you can receive a deduction.
2. If we rely on subparagraph 3 of paragraph 1 of Article 220 of the Tax Code and letter of the Ministry of Finance of the Russian Federation dated May 21, 2010 No. 03-04-05/9-277, there is no information about vehicles in this list.
3. Letter No. 03-07-14/45360 of the Ministry of Finance of the Russian Federation dated July 17, 2017 regulates the procedure for VAT refund to legal entities.

In 2015, deputies of the LDPR party prepared a bill to include transport in the list of property for which income tax can be refunded. But at the same time a certain list of criteria was compiled:

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1. The car must be new.
2. The car was produced by a domestic plant or it is a Russian-assembled foreign car.
3. The amount of payments cannot exceed 500 thousand rubles.
4. Reimbursement is a one-time event.

A list of brands and models purchased by a citizen for the first time at a car dealership was compiled. Thus, the creators of the bill wanted to stimulate consumers to buy domestic cars for the development of the Russian automobile industry.

However, the amendment has not yet been adopted. If it is reviewed and approved in 2022, it means that payments will begin to be made from this period, but for now there are no changes in the law.

For reference! According to the law, you cannot get a deduction for buying a car, you can only get it for selling it.

What documents need to be prepared

Requested documents include the following:

• PTS containing information about the transaction;
• purchase and sale agreement, which specifies the amount received from the transaction;
• documents confirming the transfer of funds (receipts, checks, receipts);
• passport;
• photocopies of TIN;
• Declaration 3-NDFL.

What to do if the car purchase documents have not been saved

If the purchase and sale agreement is lost, it can be restored - for example, by contacting the seller and requesting a photocopy of the document, or going to the traffic police (contracts are stored in archives for more than 3 years). Thanks to the purchase and sale agreement, you can restore the title if it is lost, and declare that there are no grounds for paying tax on the sale of vehicles.

Deadlines for submitting the declaration

If the seller has owned the car for less than 3 years, then he needs to send a declaration to the Federal Tax Service by April 30. Afterwards, you need to pay 13% of the sale amount before July 15 of the year following the reporting year (in which the purchase and sale transaction was completed).

What is a taxpayer entitled to?

You cannot receive a refund when purchasing a car. But the legislation provides people with another opportunity - they can return the tax on the purchase of a car if it is sold. To do this, you will need documentation that confirms the fact of a purchase-sale transaction indicating the value of the property.

Important! From this income, the citizen is obliged to pay 13% to the state treasury.

An individual can receive a compensation payment for a purchased car in the following cases:

1. The vehicle was purchased more than three years ago. In this situation, you will not need many documents. A property deduction is calculated automatically if a person has owned a car for three or more years. The Federal Tax Service is presented with papers indicating the cost of the vehicle.
2. If a citizen sells a car less than three years later at a price less than it was when purchased.

In the latter case, the right to a refund of income tax is explained as follows: when purchasing transport, a person spent his own funds. And sold it for a lower price. As a result, he received no profit, only expenses. If there is no income, you do not need to pay tax.

How to get 13 percent on a car purchase - step-by-step instructions

You cannot count on deductions from buying a car. In the case of an apartment, the procedure will be as follows:

• prepare documents, including a return application and 3-NDFL declaration;
• send them to the Federal Tax Service at your registration address;
• wait for funds to be credited to your current account.

If the deduction is issued through the employer, you will need to issue a tax certificate confirming the right to a refund and submit it to the accounting department of your company.

What to do if you haven’t kept the documents confirming the purchase of the vehicle?

There is no need to sound the alarm if you were unable to save the documentation confirming the purchase of the vehicle. The citizen still retains the right to return. But some complications may arise. Subtleties of the question:

1. A person is still exempt from taxes if he sells the car after using it for more than 3 years.
2. Sales of a car at a price of less than 250,000 rubles are not subject to personal income tax.

Important! If a citizen sells a car at a price that is more than 250,000 rubles, the tax is deducted except for this amount.

For example: a person sells a vehicle for 500,000 rubles. There are no documents confirming its purchase. A citizen is required to pay income tax. In this case, 13% will be deducted not from the full amount, but from the 250,000 rubles that will remain from the return. The seller is obliged to pay 32,000 rubles to the treasury. If he had documentation confirming the costs of purchasing the vehicle, the tax would not be withheld.

Answers to common questions about personal income tax refund when buying a car

Question No. 1: How will the seller of a car who has not declared the sale to the tax service be punished by filing a declaration in Form 3-NDFL?

Answer: The former car owner will be forced to pay a fine of 5% of the amount that must be included in the declaration for each month of delay in paying the tax.

Question No. 2: Is any bill being considered under the terms of which it would be possible to return personal income tax after purchasing a car?

Answer: Similar proposals were submitted for consideration in 2013, but they were rejected. No new bills on this issue are being considered, so no changes are expected.

Selling without profit

Let’s say a taxpayer purchased a car for 500 thousand rubles. A year later, I decided to purchase a new one, which requires selling my existing vehicle. But the deal was concluded for an amount less than when purchasing - 400 thousand rubles.

In this situation, the former owner will not have to pay income tax, due to the fact that no profit was received as such. From the point of view of the law, this situation looks like receiving “negative profit”, and therefore there is nothing to calculate personal income tax from.

Standard deduction

The standard deduction in the legal act means the possibility of reducing the tax base. For cars, this value is 250 thousand rubles.

This privilege applies in most cases if documents confirming the vehicle acquisition transaction and its cost have not been preserved. That is, it is impossible to calculate the difference “purchase minus sale”; accordingly, personal income tax must be calculated from the entire cost. But reduce the tax base by 250,000 rubles. allowed.

If the cost of the car is the specified amount or less, personal income tax is also not charged on the remuneration received.

The benefit can only be used once during the year.

Application of the netting method

The offset method is valid if, in parallel with the sale of your car, real estate was purchased or funds were contributed for treatment or study, which are subject to compensation of 13%.

In other words, you can receive 13% compensation for the purchase of residential real estate, while paying personal income tax on the alienation of the car. Let’s assume that the taxpayer sold a car for 1.5 million rubles and paid personal income tax to the state budget on the difference in the cost of acquisition and sale. In the same year, the citizen bought an apartment and has the right to apply for a property deduction. That is, in fact, the amount of tax paid on the sale of a car will be returned by offset against compensation of 13%.

We recommend additional reading: 8 situations for filling out 6 personal income taxes when dismissing an employee

These operations can be documented in one copy of the report, and as a result, there is a possibility of breaking even.

What can you get a tax deduction for in 2022?

The list of tax deductions available in 2022 is presented in Articles 218-221 of the Tax Code of the Russian Federation. They are divided into three broad categories:

• standard;
• social;
• property

Standard tax deductions in 2022 are provided to citizens by their direct employers. They are tax agents. To take advantage of the benefits, you need to prepare a package of documents, draw up an application and send it to the employer. The standard deduction for children is most often used. Its size depends on their number and is:

• 1400 rubles for the first two children.
• 3000 rubles for each subsequent child.
• 12,000 rubles for disabled children under the age of majority. If a child is assigned to the first or second group and continues full-time education, the period for providing the benefit is extended to 24 years. A deduction of 12,000 rubles is provided to parents and adoptive parents. If a disabled child is raised by trustees or guardians, the tax base can only be reduced by 6,000 rubles.

If a married couple has children from previous marriages, the common child will be considered next in order. One of the parents, at his own request, has the right to refuse to receive a deduction in favor of the other by writing a corresponding statement. The benefit is applied cyclically. Repetition is carried out annually. Payroll tax will be calculated taking into account the deduction. However, restrictions apply. As soon as the amount of income exceeds 350,000 rubles, the tax base for calculations ceases to be reduced. The preferential calculation will become available from the beginning of the new tax period.

There are other types of standard tax deductions in 2022. They can be received by:

• disabled WWII and disabled military personnel - 3,000 rubles;
• Chernobyl victims - 3000 rubles;
• heroes of the USSR and the Russian Federation - 500 rubles;
• WWII participants - 500 rubles;
• disabled people since childhood and disabled people of groups 1 and 2 - 500 rubles.

If a citizen has the right to claim several deductions at once, he will be given the maximum of them.

The legislation of the Russian Federation provides for 5 types of social deductions. This:

• for charity;
• for education;
• for the funded part of the pension;
• for voluntary insurance;
• for treatment and medications.

To receive a social deduction in 2022, after the end of the year you will need to prepare a tax return and contact the territorial authority. The documents must be accompanied by documents confirming the expenses incurred. If required, the deduction can be used in the current year. The exception is expenses for charity. To take advantage of the benefit, you will need to prepare documentation. Her list varies. Papers must confirm the right to deduction. The documents are submitted to the company where the work is carried out. The total amount of the refund cannot exceed 120,000 rubles. The restriction is valid until the tax period ends. The exception is the cost of expensive treatment and education of children. The benefit can be used within 3 years from the date of expenditure.

Property deductions are provided if the following transactions are performed:

• acquisition of residential real estate;
• sale of property;
• construction of housing along with the purchase of land for development;
• purchase of property for state and municipal needs.

If residential real estate is purchased or constructed, the maximum refund amount is RUB 260,000. This is 13% of 2 million rubles. If the housing was purchased on credit, the amount increases to 390,000 rubles, 13% of 3,000,000 rubles. The maximum amount of property deduction does not apply to loans that were received before 2014. Interest paid below will be refunded in full.

However, it is not always possible to take advantage of the benefit. It is not provided if the purchase costs were paid using maternity capital funds, from the state budget, at the expense of the employer and other persons, or the transaction was concluded between interdependent persons.

It is also possible to receive benefits when selling property. If a person owned it for less than 3-5 years, it is necessary to declare income and pay tax. In this case, the budget size will be 130,000 rubles if an apartment, land plot, cottage, room, or residential building was sold.

Benefits can be applied to several objects at once that were sold during the tax period. In this case, the total return amount should not exceed 7 indicated above. If the deduction was not used in full during the tax period, it can be carried forward to the next year.

There are also professional deductions. They are provided to self-employed citizens. Deductions make it possible to reduce the tax base by the amount of confirmed expenses.

Common mistakes

Error: An employee of an enterprise submits an application to the accounting department with a request to issue a tax deduction for him after purchasing a car.

Comment: Tax laws do not allow taxpayers to file income tax refunds after purchasing vehicles.

Error: The taxpayer submits an application to the tax service for a personal income tax deduction for purchasing a car on credit in order to reimburse the interest paid.

Comment: Refund of personal income tax to reimburse the cost of paying interest on the loan is carried out only when applying for a loan for the purchase of residential premises or refinancing a previously taken out housing loan.

How to apply for a personal income tax refund when buying a car: step-by-step instructions

To be able to return part of the funds spent on paying taxes when selling a car, you must take the following steps:

1. When purchasing a car, you must carefully check all documents relating to its value. They will be useful in the future, and it is better to have the papers certified by a notary.
2. During the first 3 years of operation of the car, you should save all payment documents confirming the incurrence of expenses for servicing the car - they will be useful if the vehicle is transferred to a new owner earlier than 3 years later and at a lower cost than it was originally purchased.
3. The car must be registered without fail, otherwise filing a declaration and selling it will become impossible.
4. You need to pay transport tax correctly.
5. In the event that the car is sold at a cost less than what the vehicle originally cost, the seller will not have to transfer tax to the budget at a rate of 13%.

To view the calculation of the taxable base, follow the ⇒ link.

Basic Rules

In order for a citizen of the Russian Federation to apply for a tax deduction, some mandatory requirements must be met:

1. The citizen must be a resident of the Russian Federation, that is, reside in the country for more than 183 days.
2. The applicant's income must be deducted from income tax to the state treasury. For individuals, this rule is followed during official employment, and the role of tax agent for personal income tax payment is performed by the employer. For individual entrepreneurs, the situation is more complicated if there is no income other than from business activities, on which income tax is not paid.
3. The property deduction, but not for the sale of the car, had not previously been paid in full. For example, a citizen exercised his right earlier, but the entire amount of 2 million rubles was not spent, but only a part.
4. All the necessary documents have been collected, and the 3-NDFL declaration has been properly completed.

When purchasing on credit

According to the law, real estate belongs to the preferential category of property from which taxpayers can return purchase tax, but this rule does not apply to cars.

It does not matter whether the property was acquired at your own expense or on credit. When purchasing housing under a mortgage loan agreement, the borrower can receive compensation for both the purchase and the interest paid. When applying for a car loan, you cannot receive a tax deduction.

When purchasing with cash

In Art. 220 of the Tax Code of the Russian Federation strictly defines the list of grounds for providing a tax deduction. Unfortunately, the purchase of a car is not yet included in this regulatory document, regardless of whether the purchase was made with your own money or in another way.

When buying on lease

When purchasing your own car on lease (previously this prerogative belonged more to legal entities, but recently it has become popular for individuals as well), income tax refund is not provided for by law.

We recommend additional reading: Tax deduction when buying a car on credit

Repeated attempts are being made to make a property deduction for a car; perhaps in the near future a bill will be adopted according to which the car will become a preferential category of property.

Required documents to receive a deduction

It is not yet possible to issue a compensation payment for personal income tax on the purchase of a car, but the law allows reducing the cost of tax deductions. The following requirements must be met:

1. Submit to the territorial office of the Federal Tax Service a completed declaration in Form 3 Personal Income Tax.
2. Collect a package of documents certifying the possibility of filing a deduction.

Depending on what basis is chosen for reducing the tax base, it is necessary to prepare the following documents:

• the car owner’s passport, which will also be required during the application process;
• TIN;
• agreement on the transaction for the acquisition of a vehicle earlier, if preserved;
• certificate of ownership of the car;
• purchase and sale agreement confirming the fact of sale of the car and the cost of the transaction;
• documents certifying the transfer of funds from the buyer to the seller for the sale of the car.

If the declaration is filled out during offset, then you will need to attach documents confirming the purchase of property or expenses for treatment or study. This list includes a certificate in Form 2 of personal income tax.