How to return mortgage interest through the tax office: step-by-step instructions

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.

The law on the return of part of the amount through a tax deduction is regulated by Chapter 23 of the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code of the Russian Federation), and various legal acts that correct the registration procedure.

According to the law, every citizen who has official income, which is taxed at a rate of 13% and pays monthly taxes on this income, has the right to social compensation in the form of a 13% refund. It should be understood that part of the amount paid for the loan is returned not by the bank itself, but by the state.

This deduction is called property, is regulated by Article 220 of the Tax Code of the Russian Federation and applies to acquired real estate. It does not matter whether the purchase of a house/apartment was paid for by the citizen immediately from his own funds or issued through a bank targeted loan.

Why exactly 13% is returned from the loan amount?

The fact is that this is exactly what individuals pay, according to clause 1 of Art. 224 of the Tax Code of the Russian Federation, from all income. In this case, the tax is levied not only on official salaries, but also on any other source supported by documents. This could be rent for land, for a garage or a room in a communal apartment, as well as taxable income from the sale of any real estate. When submitting an annual declaration to the fiscal service, citizens are required to contribute all their income received in the territory of the state. It is from the total income that the percentage is calculated.

At the same time, a citizen has two options for returning his money lost to pay personal income tax:

• basic property, that is, aimed directly at the purchase of housing;
• reduction in mortgage interest costs (interest actually paid).

What is the difference between these two types?

The fact is that citizens who purchase housing without a mortgage can also apply for fiscal compensation. In this case, only the first type of deduction is provided, i.e., in the amount of expenses aimed directly at purchasing housing.

The right to receive a return is a document confirming ownership, a purchase and sale agreement. When taking out a mortgage, a tax deduction allows you to reduce the financial burden of interest and thus reduce the amount of your monthly payment.

The main condition for such a return is the execution of a targeted loan. That is, in a situation of a cash loan without indicating the main purpose, a citizen cannot count on a mortgage tax deduction.

Thus, a property deduction can be issued both for the total purchase amount and for the bank interest actually paid. The only difference in these cases will be the amount of the refunded amount.

Which option to choose depends on the amount of the mortgage, the applicant’s income and the date of ownership of the home.

Reimbursement of mortgage interest when buying an apartment: main nuances

Many people who are already burdened with a mortgage are interested in the question of the time frame for filing an application for partial interest reimbursement. The conditions of the Tax Code of the Russian Federation are quite loyal and do not oblige the borrower to immediately collect all documents when applying for a mortgage.

The client has at least three years to submit an application to the fiscal service for a mortgage deduction. The total calculation of the deduction is formed from the moment the mortgage agreement is signed.

The procedure for applying for a tax deduction contains a lot of nuances that you need to know before submitting your application.

Basic moments:

1. When choosing the main property deduction, the payment can be received several times, for several housing properties, until the maximum established limit is reached (this applies only to those citizens who purchased housing after 01/01/2014 and did not use the property deduction before 01/01/2014). When a client chooses to deduct interest, this service can only be used once.
2. Only a resident of the country can apply for fiscal compensation. At the same time, he must have an official income and pay taxes regularly.
3. To calculate the total deduction, data for all the past three years is taken into account if the client submits an application after this time after signing the contract. If the amount of personal income tax paid is less than the estimated deduction, it will be transferred to the borrower’s account on an annual basis until it reaches the maximum established limit.
4. In the case of a tax refund on mortgage interest, a limit is set at 390 thousand rubles or 13% of the maximum amount of 3 million rubles. This is the amount of interest on the loan. In addition to paying the principal (loan body), the borrower also pays interest monthly. So, fiscal compensation allows you to return an amount of 13% of the interest actually paid. This is the rule, i.e. the limit of 3 million rubles applies only to mortgage loans issued after the changes were made in 2014. There is no limit on repayment of mortgage loans purchased before 01/01/2014, i.e. 13% is returned from all interest actually paid. The right to use the interest deduction is given to the client only once. However, this option is only possible if during the entire billing period the borrower had official income taxed at a rate of 13%.
5. The deduction can only be made for housing purchased within the country.
6. The amount will not be refunded if the tax office finds that the purchase and sale transaction took place between close relatives.
7. The amount of the annual refund is limited by the taxes paid (cannot be more than the amount of taxes paid).
8. There is no limitation period for fiscal compensation, however, the calculation will be made on the date when the transaction was concluded and, accordingly, the current tariffs of that period are applied.
9. When applying for a property deduction for housing purchased with a mortgage before 2008, the value limit will be 1 million rubles. Registration of purchase and sale after 2008 limits the amount of the main deduction to 2 million rubles. Even if the apartment costs more, the deduction will be calculated based on the maximum amount. If the price of the property is less, then it is calculated from the amount specified in the contract.
10. When refinancing a loan with another bank, the borrower can also count on a partial refund of the funds paid. However, the agreement must be formalized as a target agreement. Otherwise, the taxpayer will be denied compensation.

For borrowers who signed a mortgage agreement after January 1, 2014, the deduction is limited to 3 million rubles.

Thus, when submitting an application and preliminary calculating the amount of compensation, it is important to take into account the date of the transaction.

The calculation scheme is quite simple. A citizen who has taken out a mortgage is exempt from income tax. However, such a refund can only be made for the interest actually paid.

The borrower can determine the repayment amount independently. To do this, two factors need to be taken into account:

• total amount of real estate;
• the total amount of tax paid.

The amount of the property is specified in the contract. At the same time, the law provides for the inclusion of finishing works in the total cost, if this is included in the contract. When purchasing housing in a new building, a total amount is often included in the mortgage agreement, which includes finishing work along with the purchase of materials. So in this case, the property deduction will be calculated from the total amount.

Given the different maximum rates for calculating the mortgage deduction, let's look at specific examples of what you can expect.

Example No. 1

You took out a mortgage worth 50 million rubles in the summer of 2013 (i.e., before the new rules came into force on January 1, 2014). For the entire period of using the loan, interest payments amounted to 6 million rubles. In this case, you can claim a tax refund in the amount of 1.040 million rubles (2,000,000*13% +6,000,000*13%).

If exactly this situation had occurred after January 1, 2014, then the deduction would have been 650 thousand rubles (2,000,000*13% +3,000,000*13%).

Example No. 2

Citizen N. took out a mortgage to build a house in the amount of 3.5 million rubles. According to the established limits, only 2 million rubles are deductible. Thus, the calculation will be made as follows:

2 million * 13% = 260 thousand rubles (this is the amount of compensation for the mortgage loan).

Who is entitled to compensation?

According to the Tax Code of the Russian Federation, the following are entitled to fiscal property compensation:

The right to compensation can be exercised at the local fiscal office or through the employer through whom income tax is paid.

Who is not entitled to such compensation?

1. Unemployed citizens of the country.
2. Pensioners who do not pay 13% tax from other sources of income.
3. Working people, but at the same time receiving unofficial salaries “in envelopes”.
4. People who carried out a purchase and sale transaction between relatives.
5. Entrepreneurs operating under a special simplified scheme.

As mentioned above, the Tax Code of the Russian Federation provides for several options for deductions, one of which is property. There are also social and professional ones. When applying for other types of deductions (for education, treatment), the only barrier will be the amount of tax paid.

Refund of personal income tax on mortgage interest: determine the amount

The exact amount of compensation will be determined by specialists after approval of the application and verification of all documents. For each citizen it will be different depending on:

• housing costs;
• dates of the transaction;
• amount of interest paid.

When compensating for interest on a mortgage, the specialist calculates 13% from the total amount of interest already paid and makes a refund to the bank account

Citizen N. took out a mortgage for a period of 20 years at 15% per annum, purchasing an apartment worth 1,900,000 rubles.

1.9 million * 15% = 285 thousand rubles (interest for the year)

285 thousand rubles * 13% = 37,050 rubles (this is the amount that will be returned in a year).

It is important to understand that when calculating the amount of compensation, experts take as a basis the total amount of taxes paid by the borrower. That is, in fact, if the amount of taxes was less than the deduction due, then this right will extend to subsequent years until the funds are fully used.

If a situation arises where it is necessary to return compensation for several years at once, the application procedure will be identical. If you first learned that you can get back part of the money spent on housing on credit, this does not mean that time is lost.

Here it is important to determine the fact of personal income tax deduction at the time of conclusion of the transaction. If you were officially employed and regularly paid income taxes, then you can write an application to the fiscal service for a refund for several years at once, but no more than for the previous 3 years

Where to contact?

To exercise the right to return a partial amount for the paid mortgage, you can choose one of three methods:

1. Visit the tax office in person at your place of registration.
2. Fill out the online form on the Russian Government Services Portal.
3. Submit an application through the multifunctional center.

You can find out the number and address of the fiscal service in your city through the public services portal. To do this, you need to enter your personal data: TIN and address. Keep in mind that you need to choose a branch not according to your actual place of residence, but according to your registration address.

The electronic application option is the most convenient and simplest. In order to use the service, you must register on the site and log into your personal account.

When registering, you must provide the taxpayer’s personal information (passport number and series, TIN, registration address, SNILS). The opportunity to submit an application together in the completed declaration form will be available only after the administration has verified the accuracy of the entered data.

The multifunctional center is not geographically tied to specific addresses and accepts applications from all citizens of the Russian Federation. To use the deduction service, you must contact the center with the appropriate package of documents and submit an application for a refund of mortgage funds.

What documents need to be collected?

To minimize the waiting time for a refund application and quickly process the service, we suggest that you familiarize yourself with the package of documents required for a tax deduction:

• personal documents of the taxpayer (passport and TIN);
• property purchase and sale agreement;
• document confirming ownership of real estate;
• declaration();
• mortgage payment receipts and certificate of current debt;
• certificate in form 2-NDFL (original);
• application for refund;
• loan payment schedule (as an appendix to the agreement);
• certificate from the bank with the account number for crediting.

As can be seen from the list, any adult citizen of the Russian Federation who is officially employed and regularly pays taxes to the state can claim partial compensation for the funds spent on the purchase of housing.

What is important here is not even official work, but the monthly payment of income tax in the amount of 13%. Therefore, if a “working” person regularly gives part of his income to the state and submits a declaration, he can count on fiscal compensation.

If the apartment is shared by both spouses, the tax office must provide the original and a copy of the Marriage Certificate.

If a citizen claims a tax deduction for several years at once, but cannot provide payment documents for the loan, the tax office is allowed to accept a bank statement for payment.

The amount of fiscal compensation is determined by tax officials after checking documents and confirming personal income tax payment. Once the application is approved, the money will be transferred to the taxpayer's account. By law, this may take up to 90 working days.

In addition to the standard list of documents, tax officials may require additional papers. Let’s say that during the term of the loan agreement, the bank was declared bankrupt and restructured. Thus, the mortgage agreement becomes the property of another Lender, which means it is necessary to provide information about the assignment of the agreement to another bank.

The client can choose the method of returning money through a bank account, through a cash register or to a card.

Return procedure: step-by-step instructions

So, in order to return your legal 13% paid to the state treasury in the form of income tax, you need to follow these steps.

Table 1. Step-by-step instructions for refund

We return the property deduction through the employer

If the refund is made through the employer, the taxpayer's salary will be automatically increased by the amount of the deduction due until the money is fully calculated.

To select this option, you must perform the following steps:

1. Contact the local tax office and obtain a notice of permission to pay personal income tax on property acquisition.
2. Give the employer a statement from the Tax Service.

In order for the tax office to “approve” this option for filing a deduction, you must provide the following package of documents:

• Personal Information;
• application for fiscal compensation;
• contract of sale;
• loan agreement;
• certificate from the place of work, certified by the accounting department.

From the moment the application is submitted to the employer, the withholding of income tax is automatically stopped from the employee’s salary until the property deduction is fully calculated.

After the completion of compensation, personal income tax automatically begins to be calculated on wages. An application for a property deduction from the employer, as well as a notification of the existence of such a right from the tax office, must be submitted annually.