Who can use the simplified scheme What deductions can be obtained under the simplified scheme How to get a deduction under the old scheme How to get a tax deduction in a simplified manner The advantages of the simplified tax refund scheme The disadvantages of the simplified tax refund scheme How to get a tax deduction in a week
From May 21, 2021, a tax deduction can be obtained in a simplified manner and without visiting the tax office when purchasing residential real estate, paying off mortgage interest and on transactions on an individual investment account (IIA).
New Article 221.1 “Simplified procedure for obtaining tax deductions” was approved by Federal Law No. 100-FZ dated April 20, 2021.
Let's figure out whether the new procedure for registering a property tax deduction is so simple and suitable for everyone.
Who can take advantage of the simplified deduction scheme
Unfortunately, not all of them.
First, you must have online registration in your personal account on the Federal Tax Service website. You submit all data through this resource. Then your bank transmits the information to the tax authority, and a pre-filled tax refund application is generated in your personal account. Within 1.5 months the funds are credited to your account.
Today, you can only receive a tax deduction in a simplified manner:
- For the purchase of residential real estate.
- For mortgage interest.
- When opening an IIS (individual investment account).
And this is only allowed if an individual investment account is opened in a certain bank. Namely, that he joined information interaction with the Federal Tax Service of Russia. For now it’s only VTB.
The same applies to property deductions. The simplified procedure applies only to purchase and sale transactions carried out through a bank from the list and will not work, for example, for cash transactions.
In addition, it is not clear whether the new procedure can be applied if several deductions are due at the same time. Even if these are deductions for which a simplified scheme is approved. For example, within one year you claim an investment and property deduction. Most likely, it will not be possible to obtain a tax refund using a simplified scheme.
The simplified scheme definitely does not work if you claim the right to any type of deduction other than investment, property and mortgage. And if in one year you bought an apartment and paid for treatment, you will have to declare deductions according to the old rules - with a 3-NDFL declaration through the Federal Tax Service or through your employer.
So, the tax deduction has been simplified, but those whose banks have not joined the system will have to fill out a declaration, collect a package of supporting documents, prepare an application and submit it to the tax office according to the old scheme. Or scan each page and upload through your personal account of the Federal Tax Service.
In this situation, we recommend turning to NDFLka.ru - professionals in the field of taxation. Instruct us to prepare all the necessary applications, fill out the 3-NDFL declaration and submit it remotely to the Federal Tax Service.
If you need money urgently, order and get your tax refund in just 7 days.
When information about the deduction appears in your personal account
According to the law, if the tax office received information from a bank or broker before March 1, then it must send a notification by March 20. If the information was provided later, the service has 20 working days.
In other words, starting from 2022, the Federal Tax Service will generate a pre-filled application until March 20, and in the same year it will act in accordance with the second rule.
This is the time to ask the question: does the new procedure really allow you to get a deduction faster?
The tax office must transfer the money no later than 45 days after you sign and submit the application. However, if you consider that you will receive notification of the deduction no earlier than mid-March, payment will be due at the end of April - beginning of May. And this is if the bank or broker works promptly. Otherwise, you can wait much longer for notification and, accordingly, money. And there is no way to speed up the process.
What deductions can be obtained using a simplified scheme?
Property deductions
There are two types:
1. Tax refund when buying a home. According to the law, once in your life you can return personal income tax from an amount of up to 2 million rubles.
Even if an apartment or house is more expensive, you will not receive more than 260,000 rubles (13% of 2 million rubles).
The amount of the deduction cannot be higher than the cost of the purchased property. And if your home is less than 2 million rubles, a tax deduction will be approved within the cost of the home. You will receive the shortfall when purchasing another property.
If your annual income is less than the approved tax deduction, the remainder of the deduction rolls over to the next year. And so on until it is paid in full.
2. Refund of mortgage interest. When repaying interest on targeted loans (credits), the deduction limit is 3 million rubles, and the maximum amount that can be returned is 390,000 rubles (13% of 3 million rubles). Calculated and paid annually on interest actually paid.
If the total amount of mortgage interest paid by you has not reached the required maximum of 3 million rubles, you will not be able to transfer the balance to another property - this type of deduction is provided only for one property.
So, when buying a home with a mortgage, you can return up to 260,000 rubles from the cost of the apartment and up to 390,000 rubles in interest, this is already 650 thousand additional rubles to your budget. For spouses, the total tax refund on real estate purchased during marriage can reach 1 million 300 thousand rubles.
Investment tax deduction
If you put money into an individual investment account (IIA), then you are entitled to an investment deduction.
There are two types of deductions for IIS:
Type A - return 13% of personal income tax from contributions to IIS with a deduction limit of no more than 400,000 rubles; Type B - do not pay income tax on transactions using IIS.
In the first option, up to 52,000 rubles will be returned. The return amount in the second option depends on your results in the stock market.
The simplified procedure from 2021 will affect both types. In the first case, you will receive a personal income tax refund to your account, in the second, a certificate will be automatically generated for the tax agent in your personal account.
The simplified tax deduction does not cancel the previous refund procedure. You can apply for a property deduction through your employer or fill out a 3-NDFL declaration and submit it to the tax office.
The online service NDFLka.ru will help you correctly file a tax deduction and quickly receive your money. In this case, it is possible that you will get more than you expected. After all, the amount of the refund depends on tax nuances, which only professionals can understand.
Deduction for the cost of paying interest on loans (mortgages) for construction
If you have taken out a targeted loan for the construction of a residential building (this must be stated in the loan agreement), then you have the right to receive a deduction for the loan interest paid.
Example: Petrov A.V. took out a mortgage loan for the construction of a residential building. Petrov has the right to claim a deduction for both construction and mortgage interest costs.
You can read more about the deduction for loan interest in the section “Deduction for mortgage interest.”
How to get a deduction according to the old scheme
There are two options - through the tax office and through the employer.
1. Through the tax office
If you are a resident of the Russian Federation with official income, pay personal income tax at a rate of 13% and have the right to deductions, then:
- you need to collect copies of all documents confirming expenses;
- fill out the 3-NDFL declaration;
- submit an application to the tax office in person or through the taxpayer’s office.
If you send documents online, they must be scanned and sent from the personal account on the Federal Tax Service website. You will receive a refund in about 4 months.
2. Through the employer
In some cases, this is a more attractive way to get a tax refund. To complete it, you will need a short list of documents, and the deduction will be provided in the current year, and not at the end of it.
How does it work:
- Request a notification from the tax office about the right to deduction. To do this, write an application and attach supporting documents.
- After 30 days, you return to the Federal Tax Service and receive a notification to the employer.
- Give it to your accounting department.
Starting next month, your employer will not deduct income tax from your salary. And if this is a property deduction, then you will be refunded all the tax withheld from the beginning of the year. But remember, this rule only applies to deductions when purchasing a home. For example, from the beginning of the year, personal income tax on social deductions for treatment or training will not be returned; it will only not be withheld from the next month after notification is provided.
In addition to the property deduction, you can return social deductions through your employer: for treatment, training, pension insurance, voluntary health insurance.
Investment deductions cannot be obtained through an employer. It can only be issued through the tax office using the 3-NDFL declaration.
In what cases are you entitled to a deduction?
1. You purchased a plot of land and built a residential building on it
We are talking specifically about a residential building, and not about a residential building. The Letter of the Federal Tax Service of the Russian Federation dated 02/15/2018 N GD-4-11/ [email protected] “On the procedure for applying the property tax deduction for personal income tax” and the Letter of the Ministry of Finance of Russia dated 02/08/2018 N 03-04-07/7700 states :
“In accordance with the current legislation of the Russian Federation, the terms “residential building” and “residential building” are not identical.”
Thus, from paragraphs. 3 and 4 clauses 1 art. 220 of the Tax Code of the Russian Federation follows:
“...there are no grounds for applying property tax deductions provided for in Article 220 of the Code during the construction or acquisition of a residential building that is not recognized as a residential building.”
It should be taken into account that, according to Letter of the Ministry of Finance of Russia No. 03-04-05/27085 dated 05/03/2017:
“If a residential building is recognized as a residential building, a property tax deduction, the taxpayer has the right to receive the specified tax deductions provided for in subparagraphs 3 and 4 of paragraph 1 of Article 220 of the Code, taking into account the established requirements.”
So, one thing is important for us - you can return the tax if you built a residential building with the right to register in it, registered it with Rosreestr and received an extract about it.
Example:
In 2021, you bought a plot of land for personal subsidiary plots (personal subsidiary plot) and built a house on it. According to the documents, it is registered as a residential building without the right of registration. In this case, you are not entitled to a tax deduction. But if the house is recognized as a residential building with the right to register in it, you can receive a property tax deduction for it.
2. You bought a house under construction and completed it
Attention! If you plan to receive a refund not only for the purchase of the house, but also for its construction, carefully draw up the purchase and sale agreement. It must indicate that you are purchasing an unfinished construction project.
Example:
In a cottage village, a plot of land with an unfinished house was for sale. You have correctly drawn up the purchase and sale agreement and stated that you are buying an unfinished construction project.
After you finish building the house and receive an extract from the Unified State Register of Property Rights, you can submit documents to the tax office. The deduction will include both the costs of purchasing an unfinished house and construction costs.
Example:
You found a house you liked and rebuilt it as you saw fit: you carried out various types of reconstruction, expansion and improvement. Since you purchased a finished house and not an unfinished construction project, you will not be able to include construction costs in your tax deduction.
How to get a tax deduction in a simplified manner
A simplified tax deduction procedure starting in 2021 makes it possible to receive deductions for which the right arose in 2020.
How it all happens:
Step 1. Open the taxpayer’s personal account on the Federal Tax Service website and fill out the data for a simplified deduction.
Step 2. The bank where you have a contract for the purchase of housing or opened an individual investment account will send the information to the tax authority.
But keep in mind: this will only happen if your bank has joined the information exchange system with the Federal Tax Service. The Federal Tax Service publishes a list of tax agents on its website and today there is information about only one bank - VTB.
Step 3. The tax office will check the information provided within 20 days. After this, a pre-filled application for a deduction will appear in the taxpayer’s personal account.
Until this moment, nothing is required from you. You need to wait for the application and sign it.
Step 4. After you approve the application, the tax office will begin a desk audit, after which it will transfer the funds to you.
According to the new “Rules for a simplified procedure for obtaining tax deductions 2021”, this will take one and a half months. A month for verification and 15 days for transferring money instead of 3-4 months earlier.
Actions of the tax authority after receiving an application from the taxpayer
Having received an application from the taxpayer, tax officials will conduct an audit. As we have already clarified, 30 calendar days are allotted for it from the date of receipt. In situations where controllers find signs of a possible violation of the law, the deadlines are extended to a maximum of three months.
The inspection ends with the inspectors making a decision to grant or deny a deduction.
If the right to deduction is confirmed, then the next step of the tax authorities will be to check the taxpayer’s debt to the budget for taxes, fines and penalties. If such is detected, the tax authority will offset the amount of the deduction to pay off the debt.
The money must be transferred to the individual’s account within 15 working days from the date of the decision. If the deadline is violated, then the person has the right to claim interest calculated based on the refinancing rate of the Central Bank.
Advantages of a simplified tax refund scheme
There is no need to fill out a 3-NDFL declaration and contact the tax office. Now that it has been simplified to obtain a tax deduction, the Federal Tax Service uses the data at its disposal - information about official income and information from banks.
The time frame for a desk audit was reduced from 3 months to one, and the duration of crediting money was reduced from 30 to 15 days. In total, instead of waiting 4 months, you have the opportunity to receive funds in 1.5 months.
The design scheme has become simpler and more transparent, but whether it will work as effectively as stated is not yet clear.
There are many questions and shortcomings, and some of the wording of the law is ambiguous and introduces confusion into existing regulations.
Disadvantages of the simplified tax refund scheme
Tax deductions have been simplified, and from 2021 some processes will take place without the participation of the taxpayer. But not guaranteed.
- When applying for a deduction, interaction with the Federal Tax Service will not be reduced to zero, and may be required when providing documents.
- The period of the desk audit will last up to 3 months if the tax office has clarifying questions or suspects violations.
- Not everyone will be able to contact the Federal Tax Service on their own, since it is quite difficult to determine whether everything is taken into account in the pre-filled declaration.
- There are no explanations in the “Simplified tax deduction procedure 2021”:
- What to do if the bank does not see the fact of payment. For example, you bought and paid for a new building before 2021, and the house was commissioned in 2021, and then the right to a deduction arose.
- The same problem may arise if there was no income in 2021, for example, the apartment owner did not work or was on maternity leave.
- What to do in a non-standard situation when a parent claims a deduction, but the apartment was bought and registered in the name of a child.
- If spouses want to share expenses and each receive tax deductions from their income, a simplified deduction in this case will also be useless.
- The simplified procedure for granting a deduction will be denied if you are claiming several different deductions, for example, a social deduction for treatment and a property deduction when buying an apartment. In this case, you will have to use the old scheme.
- There is even more confusion with investment deductions. The law says that type A deduction for IIS will be provided after the expiration of the contract and in the event that type B deduction is not used. Perhaps this will lead to the fact that type A deduction will now be provided only once every three years instead of the usual annual payments
In theory, the new order looks attractive, but in reality everything is not so simple and transparent. Automatic data transfer between multiple process participants is just the tip of the iceberg. There is no certainty that during the transition period, when transactions are not processed and data transport is not verified, some information will not be lost.
Whether it’s worth taking risks and relying on chance is up to you to decide.
If something goes wrong when applying for a deduction under the simplified scheme, the taxpayer will have to not only submit an application under the old scheme, but also correct errors - that is, do double work.
And again, the choice is yours - figure it out yourself or entrust this process to the specialists of NDFLka.ru. If you want to minimize risks and receive a deduction as soon as possible, it is better to use the help of our tax experts.
