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What period should an apartment be owned in order not to pay tax

Often, the purchase of apartments at the construction stage with its subsequent resale is used by investment organizations, while they have income from the price difference. Regardless of the goal, the seller makes a profit, which means he must pay tax. In some situations, this can be avoided. It is worth knowing how long the apartment must be owned in order not to pay tax.

Apartment sale tax

In 2016, a rule of law came into force, which makes it possible not to pay the tax payment for an apartment if it is in possession for a certain time. Moreover, it is important to know how many years it should be in possession in each individual case, since the norms are diversified.

Only this year, significant changes were made, now this period is 5 years, previously it was 3. Property that can be sold after 5 years of ownership and not pay taxes includes:

  1. House, apartment.
  2. Summer cottage, garden house, plot.
  3. Other property.

If the duration of ownership was shorter before the sale, then you must fill out a declaration and pay a fee of 13%.

The plans were to adopt a minimum tenure rate of 7 years, then the legislators stopped at 5 years.

Significant changes

The new rules apply to real estate purchased after 01.01.2016. If the property was purchased before this time, then it can be sold without prejudice to your own budget in 3 years.

It should be understood correctly that the date from which the ownership period is counted is:

  • When purchasing an apartment - the date of registration of the fact of transfer of ownership, then the certificate will indicate the date from which it should be counted.
  • If the sale concerns inherited real estate, then this period starts from the day the inheritance was opened, that is, from the date of death of the one who left the inheritance.

Important! If the apartment was registered in ownership after January 1, 2016, then the general or regional period of property ownership is taken into account for taxation, when it is sold in 2016 or later.

With regard to terminology, these are new concepts that were not previously used in the law. The minimum ownership limit is five years. For individual objects, this period will remain three years, and it depends on the method of acquiring ownership rights, more specifically:

  1. When receiving an apartment as a result of inheritance or in the execution of a deed of gift by a close relative.
  2. The property was acquired through privatization.
  3. If the apartment was acquired as a result of the execution of a transaction under a contract of lifelong maintenance with a dependent.

Another new norm in 2016 is the regional period. Local authorities have the right to reduce the minimum holding period, but they cannot exceed it. So, for example, if a law is adopted in the region, in which this period is 4 years, then it is possible to sell an apartment and not pay tax by owning it for this period.

Reducing the price will not work

Before the amendments were adopted, the sale of an apartment ahead of schedule could have been made profitable for the seller by reducing its real price in the contract. The transaction amount is lower, which means less taxes.

Now this story will not pass. The taxation is based on the price specified in the contract for the sale of the apartment. In situations where it is significantly lower than the market value, then the cadastral value will be taken as the basis for calculating the tax.

In 2016, it will not be possible to sell the apartment by lowering the price of the legal payment of taxes.

If there is no time to wait

If you cannot wait for the specified period, and you need to sell the apartment, there are several options for how to reduce the tax burden. For the former owner of a citizen of Russia, the tax is 13%, and for non-residents 30%.

The options are:

  1. Pay tax on actual profits, not on the sale of the apartment. example: an apartment was bought for one amount and sold for another, most likely higher. This situation is likely if the housing is sold in a new building. Investment companies buy square meters at the stage of obtaining permits, and the sale is carried out already at the stage of readiness. The tax base will be the difference in values. But you can get such a "discount" only if you have supporting documents.
  2. Minus a million. If you managed to buy an apartment for less than 1 million, then the base is formed as the amount of the sale minus this amount. The balance is taxed at the standard rate. If the price of an apartment is less than this amount, then no tax will be paid on it.

Moreover, the choice of the option must be made by the owner. The profitability of this or that option should be considered from the point of view of how much money was spent on the purchase of an apartment.

It is advisable to use the first option if the purchase amount is more than 1 million, since in this case there is no need for documentary evidence of the purchase price.

It is impossible to use two options for reducing the tax base. Difficulties can also arise if 2 properties are sold in one year. The law prescribes the possibility of using different methods for different objects, depending on the benefits and theoretical, the Ministry of Finance also allows this to be done.

But in practice, tax authorities refuse to provide various types of reductions in the amount of the tax base. There is, of course, the option to go to court regarding this decision, but there were precedents, and they were decided not in favor of the applicant.

Even if the tax is not calculated on the income received from the sale, it is necessary to file a declaration, otherwise a fine will be imposed. Or even worse, the tax will have to be paid on the entire amount of the sale, which is specified in the contract. It is also a likely consequence, which is no longer regulated by the tax, but by the criminal code.

Features of taxation

If the object is in shared ownership, then there are some nuances when selling in a situation if the period that the apartment should be owned is less than 5 years. So, if real estate is sold under 1 agreement by all participants in shared ownership, then the amount of deduction is 1 million, divided between them in accordance with the proportions of ownership by each.

In a situation where the sale of each share is carried out under separate purchase and sale agreements, each of the owners receives his “deducted” million. But this situation is possible only if there is a real opportunity to single out the share of ownership in kind.

Another condition for such a sale is the existence of a separate property right.

Residents, non-residents

A tax resident is a person permanently residing in the territory of the Russian Federation, this term means more than 183 days. If a person lives in the territory for less than this period, then when selling an apartment that has been owned for less than five years, you will have to pay a tax of 30%.

Some nuances:

  1. If a person lives outside the Russian Federation and receives an inheritance that he wants to sell, then he will have to pay a tax of 30%.
  2. If a resident of Russia receives an inheritance outside the country, then when selling it, he needs to pay 13% of the cost to the treasury.

Implications for investors

Now it will be unprofitable for many investors to buy apartments, because the period of 5 years is not short, and this time will have to fulfill all obligations in relation to the property. In addition, it is now impossible to sell square meters at a reduced price; all the same, the mandatory tax will have to be paid in full.

It is expected that in 2016-2017 the number of speculators making money on resales will decrease, as all measures have been taken to make their life more difficult.

It is easy to file a tax return

To submit data to the tax office, you need:

  1. Copy of passport and identification code.
  2. A copy of the sales contract signed by the two parties.
  3. Financial document confirming the fact of the sale.
  4. If it comes to shared ownership, then you also need to submit an application for the distribution of tax.

Output

The mechanism of making money on the resale of apartments with the adoption of amendments to the tax code has become much more complicated. Now such incomes will decrease or their receipt will be too difficult to realize. For ordinary citizens who, for whatever reason, want to sell their apartment and, at the same time, it has been owned for less than 5 years, there are a number of ways to reduce the tax.

Attention! Due to the latest changes in legislation, the legal information in this article may become out of date!

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