Cancellation of Personal Income Tax from the Sale of Real Estate

Personal income tax (NDFL) is withheld not only from monthly salaries, but also from income from the sale of real estate. Personal income tax is 13% and 15% of income exceeding 5 million rubles.

How it was before

If the owner of real property owned it for less than 5 years, as well as if the property was acquired by donation, privatized, inherited or is the only home – for less than 3 years, then when selling such real estate there was an obligation to pay personal income tax in the amount of 13% of the income received.

That is why, when selling new housing, deals were often made with understatement in order to avoid paying taxes. Meanwhile, there is a legal way to reduce the paid tax - it is to use a property deduction. The Tax Code of the Russian Federation provided for the possibility of reducing the taxable base by 1 million rubles when selling residential houses, apartments, rooms, summer cottages, garden houses and land plots.

Let's say you planned to sell an apartment, which has been in your ownership for 2 years, for 6 million rubles. Accordingly, you had the opportunity to reduce the taxable base to 5 million rubles, from which a tax of 13% is calculated and paid.

Or you could declare not a property deduction, but reduce the income received from the sale of an apartment by the amount of documented expenses, thus, when selling an apartment for 6 million rubles, which was bought for 5.5 million rubles, taxable income for calculating personal income tax will be 500 000 rubles.

How it is now

Since July 2021, a law has come into force, which in some cases exempts owners from paying personal income tax on the sale of real estate:

• if the income (the difference between the sale price and the purchase price of real property) from the sale of an apartment, a country house or a room does not exceed 1 million rubles, and from non-residential premises and garages - 250 thousand rubles, then the owner is released from the obligation to pay personal income tax.

• Buyers of apartments in new buildings, members of housing cooperatives, as well as buyers under a “DDU contract” will be able to resell an apartment earlier than in 3 years without paying personal income tax. Under the new rules, the ownership period will be counted from the moment of full payment due under the “DDU contract”, and not from the moment of registration of ownership.

• in addition, the new progressive personal income tax rate of 15% will not apply to income from the sale of real property.

Make sure to contact TEAM for the correct execution of documents for the purchase and sale of real estate and for the correct calculation and filling out of the personal income tax return - our specialists will help you at all stages of the procedure so that the transaction is easy and painless.