Tax on the sale of apartments

In according with Russian Federation law when the apartment was sold taxpayer has to pay the personal income tax.

In this article will be described the tax duties ex-owners when apartment was sold.

For information:

The size of personal income tax (in according with Russian law) – 13%.

Situation 1 The apartment was bought after 01.01.2016

Tax is calculated from:

  • cost of the apartment in according of sale contract; or
  • cadastral cost of apartment, if the contract cost is lower 70% of cadastral cost.

If a cadastral value of apartment for 1st of junuary 2016 isnt set, then the tax is calculated from the sale amount specified in the contract of sale.

For information:

Сadastral value of apartment can be found on the website of The Federal Service for State Registration, Cadastre and Cartography (FSSR) (https://rosreestr.ru/wps/portal/online_request) or in the register FSSR.

The personal income tax are not paid:

(a) If the seller owned the apartment over three years (Minimal period owenship – in according with Russian Law) and

  • received by inheritance or donated by family members *.
  • privatized by the seller (In according of Russian Law);
  • received under a contract of life-long maintenance with dependents.

* Parents, children, grandmothers, grandfathers, grandchildren, brothers and sisters (including not full-fledged).

OR

(b) If the person owned the apartment over five years (Minimal period owenship – in according in Russian Law).

Period of the ownership apartment (for tax calculation) begin since date registration ownership in FSSR.

Owner has the right to reduce the amount of tax — Tax Deduction.

Tax Deduction

A. Standart tax deduction

If the period owenship less Minimal period owenship, taxpayer has the right reduce the tax base on 1 000 000 rubls .

For example (formula):

1. Cost of the appartment in according of sale contract – (minus) 1 000 000 rubls (Standart tax deduction) = The tax base.

2. The tax base х 0,13 = amount of tax

B. Deduction for the cost of purchasing a sold apartment

Instead of a deduction of 1 million rubles, the seller can reduce the tax base on the costs associated with the purchase of the sold housing (the cost of buying an apartment, finishing, the cost of materials).

For example (formula):

Cost of the appartment in according of sale contract – (minus) apartment purchase price = The tax base.
The tax base х 0,13 = amount of tax.

A taxpayer can use a tax deduction A or B.

С. Deduction the purchase of a new apartment.

A tax deduction may also be applied by a taxpayer in the amount of expenses for the purchase of a new apartment, but not more than 2 million rubles if sales and purchase transactions took place in one calendar year.

For example (formula):

Cost of the apartment in according of sale contract – (minus) 1 million rubles (Standart tax deduction) — 2 million rubles (expenses for the purchase of new housing, but not more than 2 million rubles.) = The tax base.

The tax base х 0.13% = amount to be paid to the budget.

Situation 2 The apartment was bought before 01.01.2016

Tax is calculated from the cost of the appartment in according of sale contract.

The income tax are not paid if the seller owned the appartment over three years.

If the period of possession is less than 3 years, the taxpayer is entitled to:

· A reduction of the tax base of 1 million rubles.

· Reduction of the tax base on expenses related to the purchase of apartment.

·Deduction in the amount of expenses for the purchase of new housing, but not more than 2 million rubles (if the purchase and sale transactions occur in one calendar year).

Examples of tax calculation are similar for property purchased after 01.01.2016

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