You can transfer ownership of property to another person by concluding one of the agreements:
- purchase and sale;
- barter;
- donations;
- annuities.
All transactions, except for donations, are paid, which means that only one party receives the benefit. If property is transferred within a family or close relatives, the state does not view this as someone’s enrichment, but only as a redistribution of benefits within the social unit.
If unrelated citizens give each other such expensive objects of civil law as transport or real estate, this is a kind of anomaly for stable trade turnover. In this case, the gift agreement may cover another transaction.
Since receiving a gift is income, the person receiving it must pay tax. Tax is paid only by the person who received the gift, not by the donor.
Tax on gift of real estate to non-relatives
Gift tax is paid as part of the personal income tax - personal income tax . This tax belongs to the federal group; no other acts (regional, local), except the Tax Code of the Russian Federation, can establish additional benefits or change the elements of the tax.
Non-relatives include all citizens other than those listed in the Family Code. If a woman wants to give an apartment to her mother as a gift, the latter will have to pay tax, since according to the code, mother-in-law and daughter-in-law are not close relatives or family members. Are not close relatives (not to mention more distant relatives):
- Parents and children of the spouse (not common children),
- Aunties, uncles,
- Cousins, sisters,
- Great-grandparents, great-grandfathers.
Even if these persons live in the same family and run a joint household, for tax purposes they are not considered close relatives.
Where to pay the calculated personal income tax
The property specified in the tax return when donating to a non-relative must be paid in full within the specified period in one payment. The recipient will receive a receipt for this, as we wrote above, when filing 3-NDFL from a tax officer.
The taxpayer can receive this receipt by mail. In the event that the recipient has lost or damaged the details, he can find them out by visiting the official website of the local tax service. It is worth noting that in this case, the citizen must look for the details of the local branch of the Federal Tax Service, and not any other!
Having received the details, the citizen can go to any of the selected banks to pay the tax.
Taxable property
There is no need to pay tax on ordinary, inexpensive gifts; there is no need to run to the inspectorate with a declaration immediately after a birthday or other celebration. A gift is taxable only if it is:
- real estate (land, house, apartment, room, yacht, boat, office space),
- vehicle (car, truck, motorcycle),
- share, share, share.
And if a gift is received from a close relative or family member, then there is no need to pay gift tax at all.
If the gift is accepted from the following persons, no tax payment is charged:
- Spouse,
- Your parents = adoptive parents,
- Your children=adopted,
- Your grandmothers, grandfathers,
- Your grandchildren
- Your brothers and sisters who have common parents, one parent.
VAT on gifts
When giving gifts to both employees of an organization and its clients, there is a gratuitous transfer into the ownership of an individual of any property or property right (Article 572 of the Civil Code of the Russian Federation).
In turn, the object of VAT taxation is transactions involving the sale of goods, works and services on the territory of the Russian Federation (clause 1, clause 1, article 146 of the Tax Code of the Russian Federation). Moreover, sales in this norm also means the transfer of ownership of goods, works and services free of charge.
Thus, goods donated free of charge to employees or clients (potential clients) of an organization as gifts are subject to VAT taxation on a general basis.
At the same time, the tax base for these transactions is determined in accordance with paragraph 1 of Art. 154 Tax Code of the Russian Federation. That is, based on the market (purchase) value of gifts, taking into account excise taxes (for excisable goods) and without including value added tax.
In turn, the market value of gifts purchased by an organization can be confirmed on the basis of invoices or delivery notes from suppliers (letter of the Ministry of Finance dated October 4, 2012 No. 03-07-11/402).
At the same time, VAT amounts presented to the donor organization when purchasing gifts are allowed to be deducted (Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated June 25, 2013 No. 1001/13).
Procedure for payment and reporting
The reporting document is called a tax return. If you receive a gift from a person who is not a relative, you must fill out a declaration in Form 3-NDFL. You can find the form on the Internet and fill it out yourself or contact any law or accounting firm.
You can send a declaration to the Federal Tax Service at your place of residence in the following ways:
- personally;
- by mail;
- through a representative;
- through a multifunctional center;
- through the Internet.
Documents must be submitted no later than April 30 of the year following the one in which the gift was received.
The inspectorate needs to obtain the details according to which the tax is paid. The amount of money must be paid by July 15 of the year in which the declaration was filed.
You can pay the tax at any branch of any bank (there is no commission at Sberbank yet) through an operator or payment terminal.
If a minor citizen did not receive a gift from a relative, then tax still needs to be paid. There are some minor nuances regarding who will actually pay the tax:
- on behalf of a child under 14 years of age, parents pay , the parents contribute money, but the child pays as if; a child can pay tax from his own funds (for example, received by inheritance), but parents must control it;
- On behalf of a citizen from 14 to 18 years old, parents can pay tax from their own funds , only if minors do not have their own income; if there is income, the tax will be forcibly withheld.
Personal income tax rate for residents and non-residents of the country in 2016
According to the Tax Code of the Russian Federation, the tax rate on gift of real estate for residents of the Russian Federation in 2021 is 13%, for non-residents 30%.
Is it possible not to pay tax on the gift of real estate?
You cannot avoid paying tax on a gift of real estate from a non-relative person!
Only close relatives do not pay the tax. But even in this case there are certain nuances.
Until a citizen comes to the tax office with a corresponding application, no one will know that he received an apartment or a car as a gift.
The Federal Tax Service receives information as follows:
- Rosreestr or the traffic police register the transfer of rights to the object,
- The registration authority transmits to the inspection the following information : type of property, address, date of acquisition of ownership, date of termination of ownership, last name, first name, patronymic and address of the former owner, full name and address of the current owner.
If the right to real estate is terminated less than three years after its acquisition, a notice of the need to pay tax is automatically generated. That is, if an apartment was bought in 2010 and then given as a gift in 2012, a notification will be received, but there is no obligation to pay tax, since the one who gave it did not receive income.
In this case, you need to write a letter addressed to the head of the tax office in free form, explaining that ownership has ceased because the property was donated. And in order for inspectors not to require payment of gift tax, you need to confirm your family relationship with the donor.
So, if a citizen received an apartment as a gift not from a relative or spouse, then he can hope that tax inspectors will not find out that ownership arose precisely on the basis of a gift agreement. But here the principle of limitation does not apply, and when the notice does arrive, you will also have to pay a fine.
On what value of the object is the tax deduction calculated?
The Tax Code does not provide a clear answer to this question . There is no clear rule.
The Ministry of Finance offers its explanations based on its own financial interests. According to the ministry, the inventory value does not reflect all factors that influence the market value of property; it incorrectly characterizes the economic benefit received by a citizen. The clarification letter notes that this is an opinion only and not binding guidance.
Judicial practice follows two paths. Some courts consider it permissible to indicate in the contract the inventory value of the apartment and, based on it, calculate the tax payable. Others are categorically against it and insist that the tax be paid on the market value.
Here we can advise the following: you need to indicate in the contract the lowest market value or cadastral value if it is close to the market value . Then inspectors will have no reason for additional verification.
Where should I pay the tax?
Gift tax is paid to the Federal Tax Service at the place of residence of the person who received the gift . The declaration can be filled out directly on the tax website.
Documents for filing a declaration
In addition to reporting, you will need:
- Passport (+copy) or birth certificate (for children under 14 years old+copy).
- Gift document (+copy).
Fine for non-payment
The fine is provided for:
- failure to submit a declaration;
- non-payment of tax.
In the first case, the penalty is 5 percent of the unpaid tax amount.
In the second case, the fine is 20 percent of the unpaid amount.
Thus, if the declaration is not sent on time, a fine will be collected both for the lack of a document and for the fact that the tax has not been paid.
If the declaration was submitted on time, that is, before the thirtieth of April, but the tax was not paid on time - before the fifteenth of July, then the fine will be collected from the amount indicated in the document.
Accounting for gifts as expenses
If tax authorities treat the very fact of giving gifts by organizations leniently, since the law does not prohibit such donations, then with the possibility of taking into account the cost of gifts in the expenses of the organization, everything is much more complicated.
The fact is that, in accordance with the current rules, expenses for profit tax purposes are recognized as justified (economically justified) and documented expenses incurred to carry out activities aimed at generating income (Article 252 of the Tax Code of the Russian Federation).
At the same time, the Tax Code of the Russian Federation directly establishes a rule according to which, when determining the tax base for corporate income tax, expenses in the form of gratuitously transferred property and expenses associated with such transfer cannot be taken into account (Clause 16, Article 270 of the Tax Code of the Russian Federation).
Since the giving of gifts is precisely a gratuitous transfer of property, from the position of the inspectors, the costs of purchasing these gifts cannot be included in the tax base for corporate income tax (letter of the Ministry of Finance dated September 18, 2017 No. 03-03-06/1/59819). Moreover, this rule is true not only for OSNO, but also for the simplified tax system.
However, an organization can still, at its own peril and risk, classify gift costs as hospitality, advertising and labor costs. In this case, expenses for gifts must be properly confirmed and justified.
For example, an organization for advertising purposes can present branded souvenirs to its clients, potential buyers and partners.
In order to take into account the cost of such products as part of advertising expenses, the organization must have not only primary documents for the purchase of such products, but also a document confirming that these products were used specifically as part of the advertising event (letter of the Federal Tax Service dated 05/08/2014 No. GD-4- 3/8852).
That is, the organization must prove that the donated souvenirs are given to potential buyers and partners for a reason, namely with the aim of increasing the customer base and, as a result, generating income.
As for gifts given to employees, in order to reduce taxable profit, they must be directly related to the production activities of the employees, and even better, be an integral part of wages.
Moreover, such gifts as incentive payments must be specified in local regulations or in the regulations on bonuses (resolution of the Arbitration Court of the Ural District dated December 17, 2014 No. A50-2698/2014).
But in any case, the organization must be prepared for the fact that it will have to defend its case in court, since tax authorities, as a rule, do not consider the costs of gifts to be economically justified expenses.
If an organization wants to avoid possible additional taxes and litigation with tax authorities, then the presentation of gifts should be made at the expense of net profit. That is, after paying tax and without taking into account the cost of gifts as expenses.
How much tax do you need to pay
The tax rate for residents of Russia is 13%, for non-residents – 30%. Citizenship does not play a role here. A resident (Russian or foreigner) permanently resides on the territory of the Russian Federation for at least 183 days a year, and a non-resident (even if he is a citizen of the Russian Federation) does not reside accordingly.
The basis for calculation is taken from the cost of the apartment. The cost must be taken objectively - market or cadastral:
- the market one cannot be taken “out of the blue” or installed by yourself - it is brought out by a specially trained licensed appraiser for an additional fee;
- The cadastral value is stated in the Unified State Register of Real Estate (USRRN) extract; it is issued after registration of the new owner’s rights to the apartment.
In other words, to calculate the tax you need to either rely on the cadastral value or specifically contact an independent appraiser.
Cadastral value is too high
There is only one option - contact an independent appraiser and order a report on the market value of housing for a fee. For individuals, such a service will cost approximately 3-7 thousand, depending on the appraiser’s price list.
If you unreasonably specify in the gift agreement a different price, which seems adequate to the participants themselves, there is a risk that the tax office, when checking the declaration, will recalculate and charge additional personal income tax + a fine.
And if you indicate the inventory value
Until 2014 (inclusive), it was possible to refer without consequences to the inventory value, which is most often lower than the cadastral or market value. Since 2015, the corresponding Review of Judicial Practice has come into force, which provides the following clarifications:
- the Tax Code does not directly establish which base to take for calculating tax when donating an apartment;
- it is permissible to rely on the appraiser’s report or cadastral value for calculations;
- the inventory value can be taken if the cadastral value is not determined.
This means that if the cadastral is indicated in the Unified State Register of Real Estate, then it is from this that the tax must be calculated, and if not, then you can stop at the inventory.
Calculation example
Calculating gift tax is very simple - you need to multiply the cost of the apartment by the rate. For example, let’s take an apartment worth 2,000,000 rubles, which my aunt gave to her nephew, a resident of Russia (rate 13%).
Then the tax will be: 2,000,000 * 0.13 = 260,000 rubles.
Is a deed of gift more profitable than a purchase and sale agreement in 2021?
Many of our Readers have probably already asked the question, if gift taxation is so expensive, might it be more profitable to transfer an apartment not under a gift agreement, but under a sales agreement? In this transaction, the donor will act as the selling party, and the donee will act as the buyer. Let us immediately note that everything here depends on the length of time the real estate has been owned by the seller:
- The tax is not imposed on real estate (dacha, apartment, house, plot, etc.) that has been in the possession of the owner for more than 5 years.
- The objects of such transactions are subject to tax if the current owner has owned them for less than 5 years.
The established tax rate is also 13% of the total purchase amount, but only if the cost of the object exceeds 1 million Russian rubles. If the value of the property is less than a million, the purchase and sale transaction is not subject to tax.
Expert opinion
Oleg Ustinov
Practicing lawyer, author of the website “Legal Ambulance”, one of the co-founders of the “Our Future” foundation.
Also, it is worth warning unscrupulous citizens and reminding them of the established criminal liability for conducting a deliberately fictitious transaction.
If tax officials or interested parties can prove that the transaction is fictitious, the parties who entered into the sham transaction may be punished, in accordance with current legislation, for attempting to mislead. At the same time, most of the responsibility falls on the donor. For example, if the amount of hidden tax from the state when concluding a deed of gift exceeds 600,000 Russian rubles, he may face criminal penalties.
What happens if you hide taxes from the budget?
The tax office annually receives information from Rosreestr about transactions carried out during the year. Based on this information, she may well establish that the recipient received the apartment, but did not pay the tax. Verifying factual circumstances is not difficult for tax authorities, because today all real estate transactions are recorded in the Unified State Register of Real Estate, and close relationships are recorded in the database of the local registry office.
If the fact of concealment of income is revealed, the tax office:
- will additionally charge personal income tax at a rate of 13 or 30%;
- impose a fine of up to 20% of the amount of unpaid tax;
- For failure to submit a return, a fine of up to 30% of the amount of unpaid tax will also be imposed.
Liability may be tax or even criminal depending on the severity of the situation. It is normatively enshrined in Art. 45, art. 75, 119, 122 Tax Code, art. 198 of the Criminal Code.
How can you reduce your personal income tax?
It is also important that after the transaction, the recipient must personally calculate the amount of the tax contribution, enter it into the declaration and submit this document to the tax authorities. It is on the basis of the declared declaration that tax specialists will calculate the final contribution, that is, check the accuracy of the stated facts.
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Donate funds to a non-profit organization in 2021
The most profitable option, which unscrupulous payers constantly try to take advantage of, is the deliberate underestimation of the actual cost of the transaction object. Moreover, if such value is not less than 70% of the amount of the cadastral value of the property, the amount will be calculated from the lesser one.
Case Study:
The deed of gift states that the value of the object of donation is 2 million Russian rubles. However, its real market value is 2,500,000 Russian rubles. At the same time, the cadastral value of this property is also 2 and a half million rubles.
Since the amount of 2 million is 20% less than the cost of 2 and a half million, the tax will be calculated by tax specialists from 2 million, which will save the payer a lot of money.
At the same time, such an underestimation of the real value of an apartment or other real estate can have certain negative consequences for the recipient, because tax officials check the compliance of the declared data. However, this method can be useful when an object is overvalued. You can conduct an independent examination yourself and challenge the value, reducing the amount of gift tax.
