Property Tax Deduction: Accountant's Guide

Every Russian who is officially employed has the right to get back part of the paid personal income tax (PIT) for large purchases. For example, if an apartment was bought during the year. The state returns part of the expenses incurred, but only under a number of conditions. Accountant Ekaterina Drozdova explained all the nuances of this process.

What Is a Tax Deduction and Who Can Get It

A tax deduction is a refund of part of the tax that your employer withheld from your salary and paid to the budget during the year.

— PIT tax deductions are a real opportunity to get money back from the state. The main condition is to work officially and be a resident of the Russian Federation. If you don«t have an official job, there is no deduction, — explains Ekaterina Drozdova.

There are many deductions, and they are divided into property, social, standard, and investment. The largest and most popular is the property deduction related to home purchases. It is this one that allows you to get back large amounts from the purchase and from paid mortgage interest.

— The taxpayer«s income (from an employer, from the sale of other property) can affect the amount of tax refunded in the current year. Previously, the formula was extremely simple: multiply the deduction amount by the standard 13% and get 260,000 rubles (approx. $2,600 at current rates) for the purchase and 390,000 rubles (approx. $3,900) for interest. But since a progressive tax scale was introduced in 2025, the refund amount now directly depends on the amount of income accumulated over the year. If your salary income exceeds 2.4 million rubles (approx. $24,000), then the tax will be at a rate of 13%, and everything above that — 15%. Income over 5 million rubles (approx. $50,000) — at a rate of 18% and so on up to 22%. Income from the sale of property is taxed at 13% on the first 2.4 million rubles, and over 2.4 million — at 15%, — clarifies Ekaterina.

You can file a declaration for the previous three years, i.e., in 2026 — for 2023, 2024, and 2025.

What Is Needed for a Home Purchase Deduction

This type of tax deduction applies to the purchase of an apartment, house, land plot, including with a mortgage. It allows you to get back tax at exactly the rates you paid. The base rate is 13%. In this case, the deduction amount for the purchase is 2 million rubles (approx. $20,000 at current rates), so you get back 260,000 rubles (approx. $2,600). Plus, you can separately claim a deduction for mortgage interest — up to 3 million rubles (approx. $30,000) (you get up to 390,000 rubles (approx. $3,900)). Total maximum refund is 650,000 rubles (approx. $6,500). But if your income is over 2.4 million rubles per year and falls under the progressive scale, the final tax refund from the state increases.

But there are important nuances. First, the purchase deduction is granted once in a lifetime, but it can be distributed across multiple properties. The interest deduction, however, is only for one property and also once. Therefore, if you are planning an expensive purchase, it is worth calculating in advance what to claim and what to leave for the future.

— If your annual income was insufficient, the deduction is carried forward to subsequent years. You can file declarations and claim the deduction year after year until the entire deduction balance is used up. The purchase deduction (2 million rubles, approx. $20,000) is granted once in a lifetime, but it can be applied to several properties, while the mortgage interest deduction is granted once in a lifetime for one property, — warns Ekaterina.

For example, a person bought an apartment with a mortgage for 5 million rubles (approx. $50,000) and will pay 1 million rubles in interest (approx. $10,000). By claiming the property deduction for the purchase and the mortgage on such property, he will use up the chance to get the maximum deduction. The expert advises weighing the pros and cons if a more expensive mortgage purchase is anticipated. In such a case, you can claim the deduction for the purchase of the apartment and use the interest deduction on another property.

To confirm expenses for the purchase of housing, a package of documents is required. These include a contract for the sale and purchase of an apartment or a share participation agreement (DDU), an apartment handover certificate for new builds, or an extract from the Unified State Register of Real Estate (USRRE) for secondary housing, a document confirming payment (a bank payment order or a mark in the contract that the seller received money in a certain amount, if payment was in cash — an equivalent of a receipt).

— To confirm mortgage interest, you need certificates from the bank about the interest paid during the year; you get a certificate each year until you pay off the mortgage. If payment documents are lost, there is a chance to restore them. If it was a bank payment order, you need to contact the bank; they remember everything and will issue a duplicate. If you paid in cash and lost the receipt, you can try to contact the seller. But such documents are better not to lose, of course, — advises the accountant.

If the apartment is registered as shared ownership, the deduction is distributed proportionally to the shares. But if the ownership is joint common ownership, the spouses can choose any proportion, up to 100% for one of them.

— It is enough to submit an application to the tax office on the distribution of shares between spouses; it is written as: husband — 100%, wife — 0, or as desired. You need to see who benefits more from claiming the deduction, — explains Ekaterina.

If the apartment is registered with allocation of shares for minors, parents can use them in their deduction, and the children will not lose their right to a refund in the future.

Separately, it is worth mentioning maternity capital. Its amount is subtracted from the cost of the apartment when calculating the deduction.

— For example, an apartment costs 4 million rubles (approx. $40,000 at current rates), bought by two parents in joint ownership, paid in part with maternity capital. Then the deduction available for it is 4 million rubles − 833,000 rubles (approx. $8,300) = 3 million 167 thousand rubles (approx. $31,700), and this amount can be divided between the spouses, — gives an example Ekaterina.

However, not all real estate entitles you to a tax deduction. What matters is not the year, but the type of property and the seller. As the expert explains, you can get a deduction for a room, a share in an apartment or room, but not for aparthotel units (commercial housing): these are considered commercial housing.

Also, you will not get a refund when buying real estate from close relatives (spouses, parents, children, siblings) due to the risk of a sham transaction or inflated price. However, you can buy from an uncle or grandmother and file documents for a tax deduction.

Many mistakenly believe that you can apply for a deduction when buying a new build immediately after signing the share participation agreement (DDU). In fact, you need to wait until the apartment handover certificate is signed.

— The apartment must be completed and handed over to the buyer. One of the supporting documents for a deduction on a new build is the handover certificate. So you need to be careful with the date of the certificate. If you received the apartment and signed the certificate in December 2025, then in 2026 you have the right to claim the deduction (file a declaration for 2025). If you delayed and signed the certificate in January 2026, then the right to the deduction is postponed until 2027. The interest deduction, by the way, also cannot be refunded until the handover certificate is received. We pay the bank, we keep the deduction in mind, — explains Ekaterina.

How to Get a Refund

There are two options for receiving the payment. The first is a one-time refund to a bank card. In this case, you file a declaration with the Federal Tax Service (FTS), the tax office checks it and transfers the money. This is the most common method.

The declaration can be filed in person on paper, by mail with copies of documents, or electronically through the taxpayer«s personal account — the latter option is the fastest and most convenient.

The second option is to receive the deduction monthly through your employer. Then the employer withholds no PIT from your salary until the deduction amount is exhausted. This is beneficial for those who want to see a salary increase every month rather than wait for a one-time payment.

— First, an application is submitted to the tax office, then you need to wait for the tax office to check the application and send a special notice directly to the employer, and then write an application at the employer«s. When receiving your salary, the employer will reduce the amount of PIT withheld. Until the approved deduction is exhausted, you will receive money without PIT withholding, thus the net salary will be higher, — describes Ekaterina.

The expert notes that, as a rule, employers usually provide deductions for children or GTO (physical fitness achievements) without problems, but property deductions they ask to arrange on your own. But by law, if you bring a notice from the tax office, they cannot refuse you. It«s just that in this case you add work for the accountant.