Does the buyer pay tax for the purchase of real estate

Property, transport and land owners have started to receive tax notifications for the past year. Now you can see the new column income tax. It is relevant for those who, receiving any income, did not report on it in the Declaration and did not pay, as expected, 13% to the state budget. Many often do not know that they are debtors on taxes and are included in the black list of the FTS. The Last letters of the Department of tax policy under the Ministry of Finance define three grounds that oblige us to pay income tax. 

The purchase of an apartment

The situation when the seller of the apartment receives income from the sale of housing and pays income tax, of course, is clear. He can be exempted from this tax burden if the housing was sold 5 years after the purchase.

What does all this have to do with the buyer? After all, unlike the seller, he does not receive money.

If the cost of the housing he buys is lower than the market value of the same apartment, the buyer also has an income. 

And here the Ministry of Finance gives a link to the Tax Code, which States that any income is subject to income tax, whether it is monetary or natural form. There are no cases when the tax is exempt from payment in accordance with the direct indication of the law. 

If we talk about buying an apartment, the buyer's income is presented in kind – it is part of the goods, which are received free of charge.

That is, by purchasing a house with a significant discount, the buyer receives a part of it for free, respectively, receives income, the amount of which is determined in the form of a Delta between the market price of housing and the value of the transaction in accordance with the letter of the Ministry of Finance dated 18.06.2018 № 03-04-06/41470.

How to determine the market value of housing? There is no specific order. The tax service has the right to assign its price and charge tax debt. In turn, citizens have the opportunity to challenge the decision of the tax and to assess their housing. If the tax service is not entitled, it shall reimburse the owner's expenses incurred in carrying out the assessment procedure. 

Penalty

In accordance with the law, citizens have many opportunities in the field of protection of their rights, one of which is the recovery of a penalty or a fine from the offender. For example, if the insurance company did not pay compensation in time, or the management company unreasonably increased the rent. But, receiving the amount of penalty or fine, the citizen receives and extra trouble: he must specify this income in the Declaration.

And this is confirmed by the Ministry of Finance, considering that the person receiving funds has all the signs of income. Since the tax legislation does not provide for income in the form of penalties and fines that would be exempt from taxes, it is necessary to submit a Declaration and pay 13% of these amounts in accordance with the letter of the Ministry of Finance dated 07.06.2018 № 03-04-05/39134.

Real estate as a gift

Not so long ago, the tax service received a reminder: not all real estate that was received under the contract of donation is exempt from income tax. Thus, the tax is not paid by persons who received a gift of real estate from close relatives or members of their family.

These include: spouse, parent, child, grandmother, grandfather, brother, sister, adopter or adopted.

If the mother-in-law gave the apartment to the daughter-in-law or the son-in-law presented it to the mother-in-law, then the income tax in the amount of 13% of cost of this real estate should be paid according to the letter of the Ministry of Finance of 01.06.2018. № 03-04-05 / 37543.

We recommend you to be careful and remember the taxes!