Deduction when buying an apartment is a joint property. Property deduction for shared ownership

There are some peculiarities when receiving a property tax deduction in the case of a spouse purchasing a home. When buying a house, spouses themselves choose the type of property: common share (divided into shares), joint joint (without division into shares) or individual (property is registered in one of the spouses). This will further determine how they will be able to receive the deduction.

It is also very important when exactly the spouses got the right to deduction: the year of signing the certificate of acceptance and transfer of the apartment, if the apartment was purchased under a contract equity participation, or the year of receipt of the certificate of state registration property rights to the object, if the housing was purchased under a sale and purchase agreement or a residential building was under construction - before January 1, 2014 or after.

If the spouses have a common shared property

The amount of the deduction between the spouses is distributed in accordance with their shares indicated in the certificate of state registration of property rights. And there is no other way to redistribute them. Even if, for example, previously one of the spouses has already exercised his right to deduction, he will not be able to receive it again or refuse his share of the deduction in favor of the second spouse. Each spouse receives a deduction up to their share.

This also applies to mortgage interest. The amount of the interest deduction is distributed in accordance with the amount of the share indicated in the certificate. And it doesn't matter which of the spouses has a loan agreement.

Each of the spouses independently submits a 3-NDFL declaration and a package of documents.

If the right to deduction came after January 1, 2014, then each of the spouses can declare, according to their declaration, the amount of acquisition costs up to 2 million rubles (depending on the cost of housing) and receive up to 260 thousand rubles (2,000,000 x 13% = 260,000).

If the right to deduction came before January 1, 2014, then, taking into account the value of the property, only 2 million rubles are distributed in accordance with the shares (this is the deduction limit for the entire property until January 1, 2014). And a maximum of 260 thousand rubles of tax to be refunded (2,000,000 x 13% = 260,000) spouses will be able to receive for the family (provided that there are no other owners).

Example 1... In 2015, the Ivanovs acquired an apartment in common ownership for 5 million rubles using a mortgage. The amount of interest paid was 3 million rubles. Ownership share of each 1/2. Each of the spouses can declare the amount of acquisition costs in their declaration for 2 million rubles (limit for the deduction for the owner) and the amount of interest for 1.5 million rubles (3 million x 1/2 = 1.5 million). In total, everyone has a refund (2 million + 1.5 million) x 13% = 455 thousand rubles.

Example 2... In 2014, the Smirnovs acquired an apartment in common share ownership for 2.1 million rubles. Share in the property of A.A. Smirnov 2/3, share in the property of E.K. Smirnova 1/3. Smirnov A.A. will be able to declare the amount of deduction of his declaration of 1.4 million rubles (2.1 million x 2/3 = 1.4 million), and Smirnova E.K. will be able to declare the amount of deduction of 700 thousand rubles (2.1 million x 1/3 = 700 thousand).

Example 3... In 2013, the Sidorovs acquired an apartment for equal ownership for 3 million rubles (1/2 each). Each of the spouses can claim 50% of the maximum deduction of 2 million rubles for the entire apartment, that is, 1 million rubles. Receive 130 thousand rubles each for a refund.

If the spouses have a common joint property

According to the Family Code (arts. 33, 34), all property acquired in marriage is a common joint property. At the same time, it is important that at the time of buying a home (concluding a purchase and sale agreement, a share participation agreement, payment), the marriage between the spouses is formalized, and a marriage agreement (or contract) has not been concluded. At the same time, it does not matter to whom exactly of the spouses is registered the ownership of the purchased housing and payment documents. The expenses are considered to have come from the general household budget.

Each of the spouses has the right to submit a separate 3-NDFL declaration with a separate package of documents confirming the right to deduction (as independent taxpayers).

If the right to a deduction came after January 1, 2014, then each of the spouses can declare the deduction in full - 2 million rubles, provided that the cost of the purchased housing is 4 million rubles or more. If the cost of housing is less than 4 million rubles, then the amount of the deduction can be redistributed among themselves by drawing up an Agreement (Application) on the distribution of the deduction and submitting it to the inspection, along with the rest of the documents attached to the declaration. This Statement is signed by both spouses.

An important point is the fact that the deduction can be distributed in any proportion, for example, 50% and 50%, 70% and 30%, even 100% and 0%, that is, one spouse can refuse his part of the deduction in favor of the other. For example, if one of the spouses has previously exercised his right to deduction for another object, or if one of the spouses does not have income taxed at a rate of 13%.

The application for the distribution of the deduction is drawn up and submitted to the inspectorate only once, and in the future it will be impossible to change the conditions for the distribution of the deduction, just as it will be impossible to abandon your part of the deduction in favor of the other spouse. The mortgage interest deduction is apportioned in the same proportion as the purchase or construction costs. This is all indicated in the same Statement.

If the deduction is distributed in the ratio of 100% and 0%, the second spouse (who has 0%) will be able to exercise his right to deduction for another housing object in the future. Of course, provided that he had never used this right before distribution. Since it is considered that if the taxpayer did not personally apply to the inspectorate with a deduction and did not submit a declaration, then he did not use the deduction.

If the right to a deduction came before January 1, 2014, then the maximum deduction limit for the entire property is RUB 2 million. And even if housing is more expensive, the spouses can distribute between themselves only 2 million rubles. Otherwise, everything is the same.

Example 1... In 2012, the Andreevs bought an apartment for 2.2 million rubles and registered it as joint property. The wife does not work, so the spouses agreed to distribute the deduction as follows: 100% to the husband and 0% to the wife. As a result, the husband filed a declaration and declared a deduction for it in the amount of 2 million rubles.

Example 2... In 2015, the Kotovs acquired an apartment for 8.8 million rubles in joint ownership. In this situation, there is no need to distribute the deduction. Everyone can declare a maximum limit of 2 million rubles on their declaration and receive a refundable tax of 260 thousand rubles.

Example 3... In 2014, the Maltsevs acquired an apartment in joint ownership on a mortgage, the cost of the apartment was 2.5 million rubles, the amount of interest paid was 700 thousand rubles. Since the husband has more taxable income, the spouses decided to distribute the deduction in the proportion of 80% to the husband, 20% to the wife. Accordingly, the husband will be able to receive a deduction in the amount of 2.56 million rubles (2 million rubles at a cost + 560 thousand rubles in interest), and a wife - 640 thousand rubles (500 thousand rubles at a cost + 140 thousand rubles in interest).

How to get a maximum deduction quick and easy?

The easiest way is to quickly prepare the correct documents for the maximum refund and submit these documents with Tax. With the Tax, the inspectorate will approve the documents and they will not have to be redone. You will receive the correct documents and expert advice. And then you can choose - take the documents to the inspection yourself or submit them online.

If the property is individual

That is, if the housing was purchased in marriage, but the ownership of the object and payment documents were issued only to one of the spouses. In this case, as already mentioned above, since the property acquired in marriage is a common joint property (according to Articles 33, 34 of the RF IC), both spouses have the right to a deduction. The deduction can be reallocated by agreement (1) by drawing up a Statement of the Allocation of the Deduction. The entire deduction can be received by the spouse to whom the title of ownership is registered (2), then the Application will not be required. If the Application is not submitted at the first application after deduction, this is considered the distribution of the deduction in full in his favor.

Example... The Mikhailovs bought an apartment in 2011 at a cost of 2.6 million rubles and registered it only for his wife. The spouses did not know about their right to deduction for some time, and when they found out in 2016, they decided that the husband would receive the deduction. Since the wife retired in 2011 and did not work anymore, the husband continued to work. In his declaration, he will declare the amount of the deduction of 2 million rubles (maximum) and attach to the declaration a Statement on the distribution of the deduction, according to which he will receive 100%, and the wife 0%.

How to get a tax deduction

On the Tax website you will find everything you need to get a deduction in any part of Russia. The tax will help you not only to prepare and submit documents, but to maximize the refund amount, prepare the documents correctly and make the refund process as simple as possible for you. With Tax, the likelihood that the state will approve the documents and they will not have to be redone will be maximum:

To receive the correct tax return and claim on our website, please click on the Next button below.

Many families acquiring residential property, register it for several owners - husband and wife, children, less often brothers or sisters. There are various reasons for this:

advice of a realtor, specialist, relative;
the need to participate in government programs associated with helping young families;
desire to avoid possible conflicts over the division of property.

The rules governing the procedure for obtaining a deduction in such situations and its amount depend entirely on the time of purchase of a residential property: before 01/01/2014 or later. This situation is due to important novelties of tax legislation.

The date of purchase of an apartment is the date reflected in the certificate of ownership of it or in the act of transfer of the object in the case of acquiring real estate in a shared building.

Application for the distribution of shares of property deduction sample

By purchasing living space in joint ownership, all its owners have the right to return personal income tax through property deduction. It is distributed by individual agreement between husband and wife. The shares of the allowable deduction are established by filing a special application with the IFTS. Its essence lies precisely in the distribution of parts, according to which the property deduction itself will be determined. It is compiled only once. In the future, the owners will not be able to either change the ratio of shares or transfer the remaining amount.

The distribution statement is sometimes referred to as a “waiver of deduction”. However, this is not true. The owner does not give up his share. The deduction is simply distributed in the amount of 100% to 0. At the same time, the spouse with a share of 0% does not lose his right to the due return.

A statement is drawn up by both spouses - the owners of the purchased housing. It is obligatory to certify it with signatures on both sides. No specific application form has been established. Therefore, it is written freely. This can be done both by hand and in printed form. The most important thing is that it is true and submitted by all owners.

Distribution of property tax deduction between spouses

Family legislation establishes that all property received by a married couple during the marriage is their joint property (RF IC, Art. 33-34). Consequently, it does not matter which one of them made the costs of purchasing residential real estate. Both are participants in similar costs (RF IC, clause 2, article 34).

When a residential property is in common shared ownership, each owner (spouse) has his own specific part. It is clearly stated in the property certificate. For example, ½. In this case, the distribution of the due deduction takes place according to the shares specified in the certificate.

No spouse has the right to give up his part or make a refund of personal income tax for the second. Even if one of them has previously used his right to deduction, the other can claim it in the already established share.
The specific amount of the property owner's deduction depends on:

time of acquisition of living space;
the prices of the purchased housing.

For purchased residential real estate before January 1, 2014 there is a limit on the amount of deduction - 2 million rubles. Therefore, if the cost of a residential property exceeds this amount, then only 2 million will be accepted for distribution.

Example 1.

In 2012, Vasilchikov I.P. and Vasilchikova N.G. bought an apartment, registering it for two. The purchase price of housing was 2,700 thousand rubles. The Vasilchikovs divided the property among themselves in half - ½ each. The deduction for them will be distributed in accordance with the shares set by them. Since they bought the apartment before 2014, the maximum return for the entire facility will be 260 thousand rubles (from 2 million). Therefore, each spouse will be able to receive the amount of tax paid on 1 million. The amount to be returned for each of the Vasilchikovs will be 130 thousand rubles (1,000,000 x 13%).

Example 2.

In 2013, the wife of Ivanchenko P.A. and Ivanchenko T.I. bought a house. The cost of the purchased real estate amounted to 1.8 million rubles. Ivanchenko's shares were distributed equally - ½ each. The wife is currently unemployed and does not receive any taxable income. The family decided that it would be better to use the entire deduction (from 1.8 million rubles) to a working husband. The IFTS refused him, since he can only count on the amount corresponding to his share. Spouse Ivanchenko P.A. can return only 117,000 rubles. (1,800,000 x ½ x 13%).

Example 3.

Spouses Pirogov T.S. and Pirogova S.A. they bought their apartment in 2013 for 3,400,000 rubles. Each owner's property is 1/2. Pirogov T.S. I have already used the deduction before. Nevertheless, S.A. Pirogova is entitled to a refund only in accordance with its share (50%) and taking into account the maximum allowable amount: 2,000,000 x 50%. She will be returned 130 thousand rubles (1,000,000 x 13%).

Effective January 1, 2014, the deduction limit was applied to the owner rather than to the property. Its size of 2 million rubles is no longer valid.

Each spouse (owner) can receive a deduction from 2 million rubles at the cost of his share of more than this amount (Letter of the Ministry of Finance No. 03-04-05 / 63812 of 12/11/2014).

In the event that the value of a share of the property is less than 2 million, a citizen has the right to “collect” a deduction to the maximum possible in the future when acquiring another object.

Since 2018, the co-owners of the property have received an excellent opportunity - by acquiring real estate worth more than two million rubles for joint ownership, previously each owner could count on a maximum of 130 thousand. The rest of the amount was burned. In accordance with the new rules, the balance can now be used in the future for other purchases of residential real estate.

Example 4.

Spouses Lapin G.G. and Lapin K.T. acquired in 2014 new apartment... Its price is 3.1 million rubles. Each spouse owns 50%. Lapin G.G. can take advantage of a deduction of ½ from 3.1 million rubles, that is, from 1.55 million. The return will be 201,500 rubles (1,550,000 x 13%).

Example 5.

Spouses Kalashnikov K.P. and Kalashnikova S.M. bought a house at a price of 8 million rubles. The share of each of them is ½. In this case, both the husband and the wife will be able to receive the maximum deduction from 2 million rubles. and return 260 thousand.

Example 6.

The Ivanov family acquired the house in 2015 at a cost of 9 million rubles. The husband's share is 80% and the wife's 20%. Consequently, the wife can return the tax from a maximum of 1.8 million rubles. (9,000,000 x 20%), that is, 234 thousand. The husband will return 260 thousand (the maximum possible amount).

So, deciding to claim a property deduction for an object that is in shared ownership, pay attention to 3 main points:

when the property was purchased (before January 1, 2014 or after);
the size of the shares of the owners;
property value.

When registering a home, it is important to think about your part. In the future, this can significantly affect the size return of personal income tax and the procedure for its implementation.

To receive a deduction, each owner submits a special application to the Federal Tax Service Inspectorate, which reflects his share in the property. The application must be signed by all owners.

When several persons acquire housing in common shared ownership, questions naturally arise: who has the right to receive a property deduction? in what size? can the right of deduction be transferred to another owner? Below we will answer these questions, as well as consider other features of obtaining a deduction when buying an apartment / house in common shared ownership.

If you have purchased housing in common ownership with your spouse or children, we recommend that you familiarize yourself with our specialized articles:

Receiving a property deduction for minor children;
Peculiarities of receiving property deduction by spouses;

The rules governing the procedure for obtaining a deduction and its amount depend on when the housing is purchased - before or after January 1, 2014. From January 1, 2014 in Tax code significant changes have been made related to the receipt of a property deduction. In this article, we will consider situations when the dwelling was acquired into common shared ownership AFTER January 1, 2014... If you purchased a home before January 1, 2014, then read the article "Receiving a deduction when buying an apartment in common shared ownership before January 1, 2014".

The note: The date of the acquisition of housing should be considered the date of state registration of ownership according to the extract from the USRN when buying under a sale and purchase agreement or the date of the deed of transfer when purchasing housing under an agreement on equity participation in construction.

Obtaining the main property deduction

When buying a home after January 1, 2014, the total deduction limit for all owners of 2 million rubles is no longer valid (since 2014, the property deduction limit is applied not to a housing object, but to a person). Wherein general order the provision of a deduction for shared ownership remains the same and is made based on the costs / share of each person (Letters of the Ministry of Finance of Russia dated 11.12.2014 No. 03-04-05 / 63812, dated 28.10.2013 No. 03-04-05 / 45699).

When purchasing housing in common shared ownership after January 1, 2014, each owner has the right to receive a deduction in the amount of his expenses (if only total amount expenses, then in the amount of TOTAL EXPENSES x ITS SHARE), but not more than 2 million rubles.

Example: B.G. Medvedev and his grandmother Medvedeva N.N. in 2019, they purchased an apartment worth 3 million rubles into common ownership. At the same time, the share of each of the owners was 1/2. In this case, Medvedev B.G. and Medvedeva N.N. will be eligible for a deduction of RUB 3 million. x 1/2 = 1.5 million rubles. (195 thousand rubles to be returned).

Example: In 2019, the brothers Zaitsev A.R. and Zaitsev S.R. acquired an apartment worth 5 million rubles into common ownership (the brothers' shares were 1/2 each). In this case, each brother will be able to receive a deduction of 2 million rubles (the maximum amount of deduction), and, accordingly, return 260 thousand rubles.

Distribution of mortgage interest deduction

In the case of purchasing an apartment on a mortgage (or another home loan), interest deduction owners-co-borrowers have the right to distribute in any proportion at will by making an appropriate written statement in tax authority(Letter of the Federal Tax Service of Russia No.BS-3-11 / 2315 dated 23.05.2016).

If payment documents are issued for only one owner

In practice, a situation may arise when the payment of the cost of an apartment occurs on behalf of only one of the owners (for example, from his bank account), but in fact all the owners bear the costs. In this case, in order for other owners to receive a deduction, documents confirming their expenses must be submitted to the tax office.

Such a document can be handwritten power of attorney Money to pay for the apartment to the person who made the payment (in addition to the main payment document). The power of attorney can be handwritten in free form and does not require notarial certification(Letter of the Federal Tax Service of Russia dated 17.05.2012 No. ED-4-3 / 8135).

Example: In 2019 Orlova E.V. with her sister Orlova T.V. bought an apartment in common ownership for 4 million rubles (the share of each sister was 1/2). Payment of the cost of the apartment took place from the account of Orlova E.V. At the end of the calendar year (in 2020), each of them submitted documents to the tax office to receive a deduction of 2 million rubles (260 thousand rubles to be returned). Orlova T.V. to the main package of documents attached a copy of the power of attorney, which indicated that she had handed over to her sister Orlova E.V. 2 million rubles to pay for his share of the apartment through a bank account.

The situation is similar with the deduction for credit interest. Even when payments are credit agreement were actually made on behalf of one of the co-owners (for example, the main borrower), other co-borrowers can also receive a deduction by submitting documents confirming their payment costs to the tax office credit interest... Such confirmation can be a handwritten power of attorney on the transfer of funds for payment mortgage interest the person who paid them.

Example: Alushtin S.S. with her daughter Milova A.S. bought an apartment in common ownership for 4 million rubles (the share of each of them was 1/2). To buy an apartment, they issued mortgage in the amount of 3 million rubles, where Alushtin S.S. was the main borrower, and Milova A.S. - co-borrower. The father and daughter also paid the mortgage in equal shares, although in fact all payments on the loan were made by S.S. Alushtin. from your bank account. Despite the fact that the mortgage payments were made by the father, A.S. Milova. can count on a deduction for mortgage interest in the amount of his expenses by submitting a handwritten power of attorney to the tax office, according to which she transferred the money to his father Alushtin S.S. to pay mortgage interest on the loan.

From this article you will learn about tax deduction when buying a share in an apartment .

The legislation of the Russian Federation makes it possible for citizens to issue a deduction when purchasing residential real estate. What are the peculiarities of using such a privilege if a person has acquired a share in housing?

Is it possible to apply for a deduction when purchasing a share in real estate?

The right to a property deduction - the one that can be issued as a result of the purchase of real estate by a citizen, arises from a person if he has acquired:

residential building, apartment, room, land plot in full possession;
share in the ownership of the relevant real estate.

At the same time, a deduction can also be obtained when registering housing in joint ownership (when the specific value of the share of each owner has not been determined).

Thus, drawing up a deduction when purchasing a share in an apartment is an absolutely legal procedure.

What is the amount of the deduction, if the taxpayer draws up it on the basis of the cost of acquiring a share in an apartment?

Determining the amount of deduction when buying a share in an apartment: nuances

In this case, it matters when exactly the share in the real estate was purchased:

until 2014;
after 2014.

If the taxpayer bought a share in the apartment before 2014, then he is entitled to receive a deduction calculated in proportion to the size of the corresponding share.

Example.

Friends Ivanov V.S. and Stepanov A.The. in 2012 they bought an apartment together, and its price was 4,000,000 rubles. At the same time, each got a share in the ownership of housing in the amount of 50%.

In this regard, each of the owners of this apartment has the right to claim a deduction calculated on the basis of the amount of 2,000,000 rubles. That is, compensation in the amount of 260,000 rubles (13% of 2,000,000).

If the taxpayer bought a share in residential real estate after 2014, then he will be entitled to receive the deduction in question, calculated on the basis of his actual expenses for the purchase of the corresponding share.

Example.

Friends Petrov A.S. and Sidorov V.N. in 2015, together they bought an apartment at the price of 4,000,000 rubles. Petrov A.S. before that he borrowed from V.N. Sidorov. large sum- 1,000,000 rubles, and the friends agreed that:

each will receive a 50% share in the ownership of the apartment;
Petrov A.S. will pay for the purchase of housing 2,500,000 rubles, and Sidorov V.N. - 1,500,000 rubles.

Thus, Petrov A.S., despite the fact that he owns 50% of the apartment, has the right to calculate the deduction based on the amount of 2,500,000 rubles. Nominally given deduction will amount to 325,000 rubles (13% of 2,500,000), but in fact, Petrov A.S. will have the legal right to receive only 260,000 (due to the limitation established by law - 260,000 rubles are the maximum property deduction).

VN Sidorov, who also owns 50% of the apartment, will be able to receive, in turn, a deduction based on the amount of 1,500,000 rubles. That is 195,000 rubles. In this case - in full, since this amount does not exceed 260,000 rubles - maximum value deduction established by law.

It can be noted that this rule also applies to legal relations in which the apartment is registered in the shared ownership of the taxpayer and his child. By law, a minor child cannot bear the costs of buying a home - they are fully borne by the parent. Regardless of the distribution of shares in the ownership of the purchased apartment, the parent has the right to deduct the deduction in full from the amount he spent on the purchase of real estate.

Example.

Frolova V.S. bought an apartment for 1,500,000 rubles, and formalized a 50% share in the ownership of this apartment for her child Masha. If Frolova wishes to issue a property deduction, then it can be calculated from the amount of 1,500,000 rubles. That is, it will amount to 195,000 rubles (13% of 1,500,000).

It will also be useful to study the peculiarities of calculating the deduction in question if the housing is not in shared ownership, but in joint ownership.

Co-owned housing: deduction calculation

If the object is jointly owned, when the amount of each share in the ownership of the apartment is not determined (this is possible if its owners are spouses), then the amount of the deduction is determined on the basis of a written agreement between the husband and wife. For the preparation of this document, it is recommended to contact an experienced lawyer.

Example.

Spouses Antonov A.V. and Antonov Yu.S. bought an apartment for 3,000,000 rubles. Antonova A.V. wanted to issue the deduction in question and concluded with Yu.S. Antonov. an agreement under which he agreed that the spouse will be able to draw up compensation from the amount of 2,000,000 rubles. YS Antonov himself, in turn, can, if desired, issue a deduction from 1,000,000 rubles.

Issue a deduction about which in question, citizens have the right:

across Tax office(FTS);
through the employer.

Let's examine both mechanisms in more detail.

How to apply for a deduction through the Federal Tax Service?

To solve this problem you need:

1. Prepare a number of documents... Namely:

application in the form of the Federal Tax Service;
3-NDFL declaration;
2-NDFL certificate;
certificate of ownership of shares in the apartment;
a mortgage agreement (if an appropriate loan was taken for the purchase of real estate), an extract from the bank, reflecting the payment of interest;
bank checks and other documents certifying that the taxpayer has carried out personal expenses for the purchase of a share in an apartment.

If the housing is not in shared, but in joint ownership (the specific amount of shares for each owner is not determined), then you will also need:

a copy of the marriage certificate (joint property of individuals, as we noted above, can only be formalized within the framework of legal relations between spouses);
a written agreement between the spouses on determining the amount of property deduction that the applicant taxpayer has the right to count on.

2. Take the prepared documents to the Federal Tax Service- on any working day of the year that follows the one for which the above declaration and certificate were issued by the person.

The FTS will take 4 months to check the documents and transfer the compensation to the taxpayer's account, which is indicated in the application.

The deduction will be transferred in an amount corresponding to the amount of personal income tax listed in Russian budget during the year for which the specified declaration and certificate were issued, but not more than the maximum amount of the deduction, determined according to the principles that we discussed above.

How do I get a deduction for my share in an apartment from my employer?

To solve the corresponding problem, you need:

1. Draw up the same documents that are fixed in paragraph 1 of the previous section of the article (however, it is not necessary to prepare a 3-NDFL declaration and a 2-NDFL certificate - they are not required when applying for compensation through an employer).

2. Transfer to the Federal Tax Service:

collected documents;
a statement on the right to deduction drawn up on the Federal Tax Service's letterhead (its form will differ from the application submitted when applying for compensation through the Federal Tax Service - you must request required document from the tax authorities).

3. Within 30 days after sending the documents to the Federal Tax Service, receive a notification from there, allowing you to issue compensation from the employer.

4. Transfer to the employer:

relevant notification;
application for deduction in the form that is used in the accounting department of the company.

After that, the citizen's salary will not be legal grounds to pay personal income tax:

before the end of the year;
until the calculated personal income tax reaches maximum size deduction, determined according to the principles that we discussed above.

If the compensation is not exhausted by the end of the year, then next year the person will need to take steps 1-4 again.