Tax Code, Art. 220. Property tax deductions

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The rules in accordance with which mandatory contributions to the budget are made are established by the Tax Code. Art. 220 defines a number of preferential conditions for subjects. They are determined depending on the specifics of deductions and the circumstances of the appearance of the object of taxation. Consider further Art. 220 of the Tax Code of the Russian Federation with comments. The material will reveal the main provisions of the norm, give notes and explanations to them.

St. 220 of the Tax Code of the Russian Federation: property tax deductions

In the process of determining the taxable base, in accordance with paragraph 3 of norm 210, the subject has the right to reduce the amount of deductions to the budget. In particular, he can receive a property tax deduction upon the sale of property, a share in it, or the authorized capital of a company. This opportunity occurs when:

1. Leaving the organization.
2. Transfer of funds in connection with the liquidation of the company.
3. Decrease in the face value of the share in the authorized capital.
4. Assignments, if an agreement was concluded on the acquisition of a residential building on the terms of equity participation in construction.

Subjectmay count on a reduction in the amount of the mandatory deduction in the amount of the redemption price of the land plot or the structure located on it, which he received in kind or in cash when the object was withdrawn for municipal or state needs.

Expenses of the subject for the purchase of objects

When determining the base, the entity can compensate for its actual expenses for the acquisition of an apartment, room, building or shares in them intended for permanent residence, as well as for their new construction. The amount of the deduction can be reduced by the cost of the cost of purchasing a land plot provided for individual housing construction, as well as within the boundaries of which the building to be taken over is located.

Calculation features

The tax deduction is provided to the subject in the amount of the costs incurred by him for the construction or purchase of one or more objects. At the same time, its size should not be more than 2 million rubles. If a person has used this opportunity partially (received less than the established amount), the balance can be taken into account in the future. For example, a person can again reduce the mandatory contribution to the budget when erecting another structure or receiving an object in personal possession within the unused amount. A similar rule applies to land plots and shares in them. The maximum amount of the deduction is equal to the amount that was in force in the period in which the subject first had the opportunity to receive it. When purchasing a land plot or a share in it intended for individual housing construction, the amount of the mandatory deduction may bereduced after receiving the relevant title papers in the manner prescribed by the relevant law.

Composition of costs

The actual costs of building or purchasing an object or shares in it may include spending on:

1. Developing estimates and projects.
2. Purchase of finishing and building materials.
3. Purchase of a structure (shares in it), including construction in progress.
4. Payment for completion or finishing services.
5. Connection to networks of water, electricity, gas supply, sewerage or the creation of autonomous communications.

Loan repayment costs

St. 220 of the Tax Code of the Russian Federation allows a reduction in the amount of deductions by the amount of interest paid on targeted loans that were used for new construction or the purchase of a room, apartment, structure, or shares in them. The same rule applies to a land plot that passes into the ownership of a subject for individual housing construction, as well as having an appropriate building or a share in it within its boundaries. It is worth noting another opportunity provided by the Tax Code. Art. 220 allows for a reduction in the amount of budget allocations by the amount of the cost of repaying interest on loans received from banking organizations for on-lending (refinancing) loans for new construction / purchase of an apartment, building, room or shares in them. The same applies to land plots passing into possession, including if there is an object on them.

Conditions

The opportunities provided for in paragraph 1 of Art. 220 of the Tax Code of the Russian Federation are provided subject to a number of features. In particular, the amount of proceeds is taken into account. The subject can reduce the amount of the budget allocation by:

1. Income from the sale of real estate (apartments, rooms, structures), including privatized premises, garden, summer cottages, plots or shares in them, owned for less than the minimum limit period provided for by norm 217.1. At the same time, their size should not be more than 1 million rubles in general.
2. Income from the sale of other real estate owned for less than the minimum period specified in art. 217.1. The amount of income in general should not be more than 250 thousand rubles
3. Income from the sale of property of a different nature, except for securities, owned for less than 3 years. The amount of income should not be more than 250 thousand rubles.

The first subparagraph applies to properties purchased after January 1, 2016

Other occasions

When selling property in connection with the liquidation of a company, exit from it, a decrease in the par value of a share, an assignment under an agreement on equity participation in construction, a subject may reduce the object of taxation. The amounts of confirmed costs related to the purchase of these valuables are taken into account. Taxpayer expenses may include:

1. Contributions to the authorized capital when establishing an organization or when increasing the company's monetary fund.
2. Purchase costsor share expansion.

In the absence of the above-mentioned expenses certified by the papers, the amount of the budget allocation may be reduced by the amount of proceeds received upon termination of participation in the organization. At the same time, in general, they should not be more than 250 thousand rubles

Income accounting

Its order is also determined by the Tax Code. Art. 220 indicates that when transferring a share in the capital of a company owned by an entity, the costs of obtaining it are taken into account in proportion to its decrease. The profit can be paid to the participant in kind or in cash in connection with a decrease in the volume of the company's fund. In this case, the funds spent by the person for its purchase should be taken into account in proportion to the decrease in the capital of the organization. The increase in the fund of the enterprise may occur due to the revaluation of its assets. In such cases, when reducing the costs of the subject, they are taken into account in the amount of payment exceeding the increase in the nominal value of his share.

Liquidation of a foreign company

The Tax Code (Article 220) in this case also provides for the possibility of the subject to reduce the object of taxation. The procedure applies to a shareholder, founder, shareholder, participant, controlling person. When selling property received upon termination of the activities of a foreign company or structure without forming a legal entity, the profit from which was exempted from taxation under clause 60 of norm 217, the reduction of the object is carried out by an amount equal to the value of material assets. It is determined in accordance with the accounting data of the liquidated enterprise. In calculationinformation summarized as of the date of receipt of property from such an organization is accepted. It is indicated in the papers that the subject attaches to the application. At the same time, the value of the property should not be higher than the market value, determined according to the provisions of Art. 105.3 NK.

Deals with a controlled foreign firm

When selling property rights (shares, shares, including) received from such a company, if its profit in this case and the costs in the form of the cost of their purchase are excluded from its revenue / loss in accordance with paragraph 10 of Art.. 309.1, by an entity acting as a controlling or Russian related person, the amount of costs is determined at the lower of the cost:

1. Authenticated by credentials. Reporting information is taken at the date of transfer of ownership from the controlled company. The day is determined by the provisions of Art. 105.3.
2. Market.

In the case of the sale of property that is in common shared or joint ownership, the amount of the deduction is distributed among the co-owners in proportion to the share of each or by agreement.

Exceptions

Unless otherwise provided for in Art. 220 of the Tax Code, the provisions of sub. 1 item 1 does not apply to proceeds received from transactions:

1. With securities.
2. Real estate or vehicles used in business activities.

Opportunities for the donor entity

When he sells the property that he received during the dissolution of the targetfund, cancellation of donations and other cases, expenses are recognized as funds aimed at receiving, storing, maintaining material assets spent on the date of their transfer to the organization-owner of the capital. This provision is valid if the return is provided for by the agreement or Federal Law No. 275. The duration of the property in possession received by the donor upon dissolution of capital, cancellation of the donation and in other cases, is established taking into account the period of storage of the objects by the subject until they are transferred.

Necessary papers

A subject wishing to take advantage of the opportunity to reduce the mandatory contribution to the budget must provide documents confirming the ownership of the property:

1. Agreement for the purchase of a structure, room, apartment, land or building on it or a share in them.
2. Agreement on equity participation in construction and a deed of transfer (when acquiring rights to an object).
3. Certificate of birth of a child - when parents buy a house, apartment, room, land or shares in them for a minor (or a decision of an authorized body to establish guardianship over a person under 18).
4. Documents confirming the costs of the subject. These include receipts for orders, bank statements on the transfer of funds from the buyer's account to the seller's account, cash and sales receipts, acts of purchase of building materials, etc.

Note

The tax deduction provided for insub. 4 paragraph 1 of the norm in question in the amount of costs aimed at paying off interest on loans of a target value received before the date of entry into force of Federal Law No. 212, as well as loans for refinancing these loans, is provided without taking into account the restrictions established by paragraph 4 of Art. 220.

Amount of interest reduction

The deduction provided for in sub. 4 p. 1 art. 220, is provided in the amount of expenses incurred by%, according to the terms of the agreement with the bank, but not more than 3 million rubles. In this case, the person must have certifying papers. These include documents that confirm his right to use the provisions of the norm in question, an agreement with a credit institution. The subject also provides papers certifying the costs incurred by him to repay %.

Restrictions

Tax deductions are not provided for the costs of the subject for new construction or the purchase of a structure, apartment, room (shares in them), covered from the funds of the employer or other persons, family (maternity) capital, directed to the implementation of additional state support measures, budget. A similar rule applies to transactions made by related individuals.

Features of subjects

Parents (including foster parents), guardians, trustees who carry out the construction or purchase at their own expense of buildings, rooms, apartments, land or shares in them for minor children (wards, guardians) can take advantage of the provisions of the norm under consideration. Valuethe deduction is determined in these cases in accordance with the costs incurred, taking into account the restrictions provided for in paragraph 3 of the rule in question.

Submission of documents to the control body

The tax deduction is provided upon submission of the declaration by the subject at the end of the relevant period, unless otherwise provided for in the norm under consideration. The ability to reduce the mandatory deduction established in subpara. 3 and p. 1, a person can use earlier than the above period when applying with an application (in writing) to the employer. At the same time, the supervisory inspection must confirm his right to apply the provisions of this rule in the form approved by the executive federal body.

Interaction with the employer

Tax deduction established sub. 4, paragraph 1 of the norm under consideration, is provided only in relation to one object. A person may obtain it from one or more employers of their choice. If the deduction was provided by one tax agent, and the subject applies to another employer with the following application, the reduction in the amount of the deduction is carried out in the manner determined by clause 7 of the rule in question. The employer must satisfy the request of the person upon receipt from him of the relevant paper issued by the control authority. Confirmation of the right of subjects is carried out by the tax inspectorate within a period of not more than 30 days. from the date of application.

Extra

If, at the end of the period, the sum of all receipts of the subject received fromemployers, turned out to be less than the amount of deductions provided for in paragraphs 3 and 4 of the norm in question, the person can use the provisions of paragraph 7. If after the employer withheld the amounts without taking into account the reduction, the excessively deducted funds are subject to return in the manner determined by Art. 231.

Conclusion

If in the period the deductions established sub. 3 or 4 of paragraph 1 of the norm under consideration cannot be used in full, the remainder can be transferred to the future, unless otherwise provided by this article. For entities receiving pensions under the current legislation, a reduction in deductions to the budget may be included in previous years, but not more than three. However, they must immediately precede the period in which the carryover balance appeared. Re-provision of property deductions provided for in sub. 3 and 4 p. 1, art. 220 is not allowed.