What has changed in the tax on income from the sale of new buildings

At the end of last year, the tax legislation of the Russian Federation underwent changes. The State Duma adopted a law (No. 374-FZ) that allows participants in shared-equity construction to save on paying taxes.

If you purchased a property in a new building that has already been commissioned or in a house that is still under construction, but then decided to sell it, you will have to pay a tax of 13% of the income received as a result of the purchase and sale transaction. And here there is one BUT.

If you have been the owner of the property for a minimum period of time, then the profit from the sale will be exempt from taxation.

How is this minimum allowable period calculated? If this is the only real estate object that you own – 3 years, if there are two or more such objects-5 years.

The new law amended the calculation of the term of ownership of real estate for those cases when it comes to the sale of housing (or shares) under an equity participation agreement (DDA). So, paragraph 15 of Article 2 of the said Law states that the period of ownership should be counted from the moment when the cost of living space or shares (in accordance with the DDA) was paid in full. Prior to the entry into force of the legislative act, the period of ownership was calculated from the date of state registration of the property right.

That is, now the property purchased under the DDA and fully paid for at the time of the purchase and sale transaction can be sold without taxation at the time of registration of ownership. The period during which the house was built will be counted as the period of ownership.

What should I pay attention to?

It is important to note that in the case of the conclusion of the DPT, the term of ownership of the apartment or shares in it begins on the day of full payment of the rights of claims, and not on the day of signing the contract. What does this mean in practice? If you buy a property with cash or a mortgage and pay its cost in full, you immediately become the owner. If you have used the installment plan offered by many developers, you pay the amount in installments over a certain period.

And in this case, the term of ownership will begin to be calculated from the moment of full repayment of the debt.

It is also worth noting that the adopted law officially entered into force on November 23, 2020 (the day of publication) and applies only to the primary real estate market. The law covers transactions and, accordingly, the income of individuals that were received starting from the tax period of 2019.