How to get a tax deduction on interest paid on a mortgage

Of all banking credit products, mortgages are the most onerous and time-consuming. But sometimes it is precisely such a loan that allows citizens to realize their dream of purchasing their own home. In this article we will tell you how to return interest on a mortgage aimed at purchasing real estate using a tax deduction.

According to Russian legislation, a citizen can return part of the funds paid for taxes or reduce the tax itself when buying a home on credit. This deduction option is called property deduction and was created for the purpose of social assistance to citizens who purchase housing with their own money.

How to get your mortgage interest back

Who is eligible for an income tax refund?

Any citizen of the Russian Federation who is officially employed, receives a “white” salary and pays a 13% tax on personal income can return part of the taxes. These are employees of various organizations and entrepreneurs who work according to the basic taxation system. Pensioners can also apply for an income tax refund if no more than three years have passed since their retirement.

And if you purchased real estate before 2014, and you have a husband or wife, then payments can also be increased. After all, spouses have equal rights to property tax deductions, even if one of the spouses is not indicated in the purchase and sale agreement and the loan agreement. All property and rights acquired during marriage are considered jointly acquired, unless otherwise stated in the marriage contract. The easiest way to understand the principles of personal income tax return is with examples.

Let's consider the simplest case

The apartment was purchased with mortgage funds in 2021. The property is registered immediately. Loan - 1,000,000 rubles for 10 years at 11% per annum. Monthly annuity payment - 13,775 rubles. 9166 of the monthly payment is interest. With each payment, this amount gradually decreases, and payments towards the principal debt increase accordingly. For the entire period, interest on the loan will amount to 653,000.14 rubles. Accordingly, you are entitled to a refund - 653,000.14 * 13% = 84,890.01 rubles. The size of the salary in this case is not important to us, since it is enough for the monthly payment. In this case, we do not take into account the property deduction (260 thousand) for the purchase of an apartment (for the purity of the example). Let's assume that they have already used it before and lost their rights to it.

You cannot receive a tax deduction in advance, immediately for the entire loan term. After all, you have not yet paid interest to the bank in order to demand a personal income tax refund for it. No one can guarantee that the borrower will be able to pay the mortgage throughout the entire term or will not close it early.

In what case can you partially return the interest paid on the mortgage?

Experts say that such a refund is possible. The following conditions must be met:

• Availability of official income. The state of the Russian Federation can partially return funds only from income that is listed in the tax return.
• The amount cannot be higher than what you have already paid to the tax fund.
• The client must submit an application to the tax office after transferring the established amount of personal income tax.
• The applicant cannot have debts to the Russian Federation.
• A woman on maternity leave and a non-working pensioner cannot receive a tax deduction, even partially.
• The right to return personal income tax can only be used once.

How to get a tax deduction for mortgage interest over several years

In 2021, a share participation agreement was signed; a mortgage of 2,000,000 rubles was taken for the purchase for 10 years. The apartment was registered as a property in 2021. The rate was set at 11%. The size of the monthly annuity payment is equal to 27,550 rubles. Moreover, in the first months of the mortgage, about 18,000 rubles of the monthly payment are interest. With each payment, this amount gradually decreases, and payments towards the principal debt increase accordingly. Over the entire lending period, mortgage interest will amount to 1,306,000.27 rubles. That is, the buyer can return: 1,306,000.27 * 13% = 169,780.03 rubles.

With a salary of 50,000 rubles a month, you can theoretically return 78,000 in a year. But this is only theoretical. Let's assume that the salary is constant - it has not changed in the last three years and will remain constant throughout the entire term of the mortgage. In this case, at a time, a citizen can receive part of the deduction due to him for the three previous years. When the property has not yet been registered, but the mortgage has already been paid. To do this, you need to draw up three declarations in form 3-NDFL for the three previous years. And then you will have to submit a declaration annually or every three years. In this case, we do not take into account the property deduction (260 thousand) for the purchase of an apartment. Let's assume that they have already used it before and lost the right to receive it.

Rights to refund of income tax arise only from the moment ownership arises. And the right of ownership arises from the moment the transfer and acceptance certificate is signed and the ownership right is registered by the relevant government bodies.

Maximum amount

To calculate the amount required by law, you need to understand how mortgage taxes are deducted. When you start calculating funds, you need to try to take into account many restrictions that complicate the client’s position. Sometimes, due to ignorance of certain details, the user does not receive the 13 percent he is entitled to on the purchase of a home.

The state sets a maximum tax deduction threshold. It cannot be higher than 2 million rubles for the cost of housing and 3 million rubles for the interest paid by the borrower. 13 percent of these amounts will be 260,000 rubles and 390,000. The maximum refund will be 650,000 rubles. The consumer will not be able to receive more than the specified amount, no matter how expensive his apartment is.

The state will not be able to pay you more than 650,000 rubles, but it can easily pay you less. If the client earned a million and bought an apartment for 500,000 rubles, then the deduction will be the same, and 13% of it will be 65,000 rubles.

Thus, the required 130,000 of half a million over 24 months. If you register shared ownership, the amount will be distributed based on the shares assigned to each participant in the process.

Look at the same topic: Under what conditions does Sberbank give a mortgage for the construction of a private house?

When spouses purchase an apartment as joint property, they write a corresponding statement indicating their parts. Based on the completed documents, the amount of tax deduction for the husband and wife will be calculated. The share can be up to 10% to 90%. If one participant involved has already received a property return, then the second one will not be paid more than 50%.

Get deductions for your apartment and mortgage interest at the same time

This situation is quite rare. For example, if the deadline for filing a declaration was missed. Or a shared construction project was purchased and the property arose somewhat later than the mortgage. And also the taxpayer’s income in this case must be quite large. So that the amount of personal income tax withheld for the previous 3 years covers the standard property deduction for the purchase of housing (260,000 rubles) and still remains for a deduction for mortgage interest. Typically, income taxes on the purchase of a home are refunded first, and then the interest on the mortgage.

So, the apartment was purchased for 2 million rubles with a mortgage in 2021, the property was registered immediately. A mortgage loan was issued for 1,000,000 rubles for 10 years at 11% per annum. The size of the monthly annuity payment is equal to 13,775 rubles. RUB 9,166 of the monthly payment is interest. With each payment, this amount gradually decreases, and payments towards the body of the loan (principal debt) increase accordingly. Over the entire lending period, interest on the loan will amount to 653,000.14 rubles. With a salary of 50,000 rubles per month (600,000 per year), you can return up to 78,000 in a year. Let’s assume that the salary is constant - it has not changed in the last three years and will remain constant throughout the entire mortgage term. First, you receive a standard property deduction. Three declarations are submitted for the three years preceding the purchase of real estate.

According to declarations of 2015, 2021, 2021, we return personal income tax - 78,000 * 3 = 234,000 in 2021. We will declare the remaining 26,000 rubles towards the personal income tax refund for the purchase of real estate next year, 2021. This amount is added to the deduction for mortgage interest paid. Then every year we reimburse the remainder until the end of the loan term.

Thus, under these conditions, during the entire term of the loan you can repay a total of: 260,000 + 84,890 = 344,890 rubles. Unless, of course, the loan is repaid for the entire planned period and is not repaid ahead of schedule. In this case, the amount of interest for using the loan can be significantly reduced. And what will be more profitable needs to be decided in each specific case.

Interest deduction for refinancing (loan refinancing)

If you refinance a loan with another bank, you can receive a deduction for interest on both the original and the new loan (clause 4, clause 1, article 220 of the Tax Code of the Russian Federation). At the same time, it is important that the new agreement clearly states that it was issued to refinance a previous targeted loan.

Example: Golovanov I.V. I bought an apartment in 2019 worth 3 million rubles (of which 1 million rubles were my own funds, and 2 million rubles were borrowed). In 2021, he refinanced the loan with another bank. Then, upon receipt of the interest deduction, Golovanov I.V. will be able to take into account the interest paid on the first and second loans.

The apartment has not been put into operation, but I already want to return the personal income tax

But sometimes it happens like this: in 2021, a share participation agreement was signed and a mortgage was issued, the house was put into operation in 2021, and then the transfer and acceptance certificate was signed and the property was registered.

In 2021, the owner decides to take a deduction for the interest on the loan for 2021. In this case, the tax office will refuse payment. Because the reporting period when the taxpayer became the owner has not yet ended.

If the property was registered in 2021, then the first application for a personal income tax refund for interest should be submitted only at the end of the calendar year - in 2021.

When to file a return and when will your income tax be refunded?

A declaration for income tax refund can be submitted to the Federal Tax Service throughout the year. In this case, there are no restrictions on the deadline for submitting it until April 30.

However, the sooner the declaration and related documents are completed and submitted, the faster you will receive money into your account.

The maximum period for receiving tax deductions for accrued interest on a mortgage loan is 4 months after submitting a complete package of documents to the Federal Tax Service: 3 months for conducting a desk audit and 1 month for transferring money.

How much can you get?

For the purchase of housing
13% of the cost of housing, but not more than 260 thousand rubles. For example, an apartment costs 5 million rubles, the state will return 260 thousand rubles to you. If the room costs 1 million rubles, the cashback will be 130 thousand rubles. You can return the remaining 130 thousand rubles when purchasing other real estate properties.

If the apartment was bought by spouses as joint or shared ownership, then each can return up to 260 thousand rubles. That is, if the cost of the apartment is 5 million rubles and equal shares, everyone will receive 260 thousand rubles (520 thousand for two).

Even children have the right to a tax deduction. It is important that they also have a share in the apartment, and that their parents pay taxes at a rate of 13%.

Mortgage loan deduction

You can also get 13% back on the interest paid on your home loan. The maximum you can get is 390 thousand rubles. For example, last year you paid interest on a loan of 100 thousand rubles, then the tax deduction will be 13 thousand. If the interest was 700 thousand rubles, then 91 thousand will be returned.

How to get a tax deduction for mortgage interest paid

Preparing documents yourself is not particularly difficult. For this you need:

• Register on the Federal Tax Service website and create a personal taxpayer account.
• Fill out the 3-NDFL tax return on the Federal Tax Service website. Download and print it.
• From the accounting department at your place of work, obtain a certificate in Form 2-NDFL about the taxes withheld from you.
• Prepare copies of documents confirming the mortgage: loan agreement, loan or mortgage agreement concluded with the bank and payment schedule.
• Prepare copies of payment documents that confirm payment of interest on the loan (mortgage) agreement. These can be cashier's checks, statements of personal accounts, bank statements.
• The completed package of documents must be submitted to the tax office at your place of residence. You can also send it by mail, but you may then be asked to present the original documents.

All! You can expect a payment to the bank details you provided.

The employer can return personal income tax

You don’t have to wait for the end of the tax period. You can receive what is due to you by law from your employer by confirming your right to the Federal Tax Service. To do this you need:

• Submit an application to the Federal Tax Service to receive notification of the right to receive a deduction
• Submit an application to the Federal Tax Service office at your place of residence to receive a notification, attaching copies of the relevant documents.
• In a month, receive a notification from the Federal Tax Service for the employer.
• Submit the received notice to the employer's accounting department. It is this paper that will be the basis for the fact that income tax will not be withheld from you until the end of the year.

If you are confused in all these intricacies, you can use the services of tax consultants or a special service of Sberbank. Filling out the declaration and preparing a package of documents will cost you only 1,500 rubles.