Mortgage property deduction - how to return, percentage, documents for submission to the tax office

A new apartment is always a joyful event. And it can become even happier when you find out that the return of mortgage interest is fixed by law by the state - by collecting the necessary documents, the owner can receive a serious deduction of up to 13 percent. You can receive such a deduction either directly in cash or by reducing the taxation of your income by a certain amount.

What is a mortgage tax deduction

When applying for a mortgage to buy a property, you should be aware that you have the option of receiving two types of deductions. The main (also called property) deduction will be the same as for a regular home purchase - 13% of the amount paid, with a "ceiling" of 260 thousand rubles. Along with this, you are also entitled to another deduction - on the interest paid on credit. It is issued only after receiving a property deduction (or balances on this payment), which is why the sooner you collect the documents and submit them to the tax office, the better for you.

How much can you get back from mortgage interest?

Based on Russian law, you can count on a refund of 13% of the interest payments on the loan. If your loan agreement was concluded in 2014 and later, then the return cannot be more than 390 thousand rubles, and if the documents were signed earlier, then there will be no restrictions on the maximum amount. For example, you took out a loan in 2015 for ten million rubles, while four million were paid as loan interest. But still, you can only count on a deduction from three million rubles (13% of which will be 390 thousand rubles), and not from all payments.

How many times can you get

The reform of the tax legislation of Russia in 2014 changed the rules according to which tax deductions are given when acquiring real estate, however, this applies only to the property (basic) deduction. If you did not receive it in full (that is, the amount is less than 260 thousand rubles), then you can use the balance when you want to buy another apartment. Turning to the conversation about the return of interest on a mortgage loan, you can see that there are much more restrictions - such a deduction can be provided only once and only for a single object (apartment or house).

Mortgage interest reimbursement

The tax deductions for a mortgage loan fixed in Russian legislation are guaranteed to everyone who has drawn up an agreement with a bank, so all that is required from the applicant for the return of mortgage interest is to correctly complete the documents for the IFTS. There are many nuances associated with tax refunds when repaying a loan ahead of time and with shared ownership of an apartment. That is why it is not superfluous to first study the relevant law or consult a specialist for advice - this will help you avoid many annoying mistakes.

Over the past years

When submitting a package of documentation to the tax office for the return of interest on a mortgage, it is required to indicate in it the payments made for the entire time since the beginning of the loan, and not just for the previous year. So, having taken a loan in 2014, five years later you mention loan payments for the period 2014-2018 in the declaration. Next year, 2020, data for 2019 will be added to them, and so on. At the same time, you will no longer have time limits, and if you pay off a mortgage loan for 15 years, it means that you can receive compensation provided for by law all this time.

For early repayment

Looking on the Internet for materials on this topic, you run the risk of falling into a maelstrom of reports of lawsuits against banks. That's right - at present, the return of money by banks when the loan is repaid before the scheduled date is the subject of numerous litigations (and the courts very often decide in favor of depositors), but this only applies to the relationship between the client and the bank. If the interest on the mortgage is to be returned upon early repayment of the loan, then the amount that you actually paid and indicated in the declaration is taken into account in this case.

With shared ownership

If several people acquire an apartment in the form of shared ownership, then in what proportion will the tax refund of interest on a mortgage loan be distributed among them? Acting as co-borrowers and having equal property rights to joint property, these people can distribute the share of the tax deduction among themselves at their own discretion. When buying apartments, very often close relatives (for example, spouses) act as co-borrowers, and it is more convenient to receive tax deductions in full for one of them - the one who has a higher official salary.

Mortgage refinancing tax deduction

There are cases when, when purchasing an apartment on a mortgage loan, a person after a while finds a bank with more affordable conditions and carries out a refinancing procedure, choosing a new lender. All rights are retained and after the settlement with the former bank is completed, it is provided with a deduction for payments to the second bank. It will be in your interest to notify the tax office in a timely manner so that it is warned in advance about this situation. Without fail, the new loan agreement must contain a clause on refinancing.

Who is eligible for a VAT refund?

According to the legislation, the right to receive a personal income tax refund in case of purchasing a property on a mortgage belongs to the mortgage borrower (co-borrower), who is entitled to 13% paid to the bank on the mortgage. As for the homeowner, it is possible for him to return income tax on the money spent on the purchase of a house or apartment. Since the borrower is not always the owner of the home (for example, a citizen purchases an apartment for his daughter), these two categories should be clearly distinguished when preparing a declaration for the tax authorities.

Documents for reimbursement of interest on a mortgage

If you are going to receive a refund of interest on a mortgage, you must prepare a package of documents that you will provide to the tax office. It is very convenient that many of them can be filled out online using special services on the Internet, which ultimately saves a lot of time for submitting documents. The main package of documentation for the IFTS includes:

• an application for reimbursement of interest on a mortgage when buying an apartment (it is necessary to indicate the number of the bank account where the money will be credited if you are going to return the funds for mortgage payments through the tax office);
• completed declaration 3-NDFL;
• certificate 2-NDFL;
• a photocopy of the mortgage (loan) agreement, to which the repayment schedule must be attached;
• bank certificate on payments and documents confirming payment (cheques, receipts, statements).

Part of the documentation for the return of interest on a mortgage is allowed in the form of copies, but then it is recommended to submit them personally and have the originals with you so that the inspection staff can check the compliance with the document and make appropriate notes. The documents provided will not be returned to you, so copying can be called a very reasonable decision. You can also certify copies yourself without resorting to the services of a notary.

How to get mortgage interest back

By providing the tax office with a package of documents for the procedure for returning interest on a mortgage, you can receive money in various ways - either the entire amount at the end of the calendar year, or gradually reimburse through the employer. Depending on the situation, one or another option may be convenient, but it is important that if you have the appropriate decision from the tax office, this money will still be with you.

Through the tax

After the end of the year for which the deduction is made, you can receive money on a plastic card. To do this, you will need to indicate this option in your application, attaching to it the details of the card to which payment will be made through the tax office. For many, this form of payment for the return of interest on a mortgage will be more convenient, because the entire amount can be taken immediately.

Through the employer

In a situation where you do not want to wait for the beginning of next year, it is possible to receive the required deduction from your employer by providing him with a package of documents from the tax office. In this situation, compensation of interest on the mortgage will occur as follows - when calculating earnings every month, you will not be withholding income tax for some time, which is also very convenient.

How to calculate mortgage tax deduction

Like mortgage interest, the amount of the tax deduction is also among the information that customers are first interested in when they get a loan from a bank. This information can be provided to you by the bank employees themselves, who have pre-made calculations for the most common loan sizes and disbursement terms. Just do not try to do these calculations yourself, in the absence of appropriate knowledge in mathematics and economics, it is very likely that you will get the wrong option, which will only mislead.

Online tax deduction calculator

A good way to calculate the amount due to you is to find an online calculator on specialized sites on the Internet. Most of the initial data should be known to you, so feel free to enter the purchase amount, loan amount and other necessary information into the appropriate windows. For example, you want to take a million for three years at 15%, and faster than you read this line, the calculator will calculate - in the first year you need to pay 130,891.31 rubles of interest and you should be compensated 17,015.87 rubles.

Video: 13 percent return on mortgage interest