Property Tax Deduction: An Accountant's Guide

Every officially employed Russian has the right to reclaim part of the personal income tax (PIT) paid on major purchases, such as a home bought during the year. The state reimburses a portion of the expenses, but only under certain conditions. Accountant Ekaterina Drozdova explains 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.

«Tax deductions for personal income tax 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, divided into property, social, standard, and investment types. The largest and most sought-after is the property deduction related to home purchases. It allows you to reclaim substantial amounts from the purchase price and mortgage interest paid.

«The taxpayer»s income (from an employer, from selling other property) can affect the amount of tax refunded in the current year. Previously, the formula was simple: multiply the deduction amount by the standard 13% to get 260,000 rubles (approximately $2,900 at current exchange rates) for the purchase and 390,000 rubles ($4,300) for interest. But since a progressive tax scale was introduced in 2025, the refund now directly depends on the total annual income. If your salary exceeds 2.4 million rubles ($26,700), the tax rate is 13%; anything above that is 15%. Income over 5 million rubles ($55,600) is taxed at 18%, rising to 22%. Income from property sales up to 2.4 million rubles is taxed at 13%; above that, at 15%,« Ekaterina clarifies.

A declaration can be filed for the previous three years, meaning in 2026 for 2023, 2024, and 2025.

What is required for the deduction on home purchases

This type of tax deduction applies to the purchase of an apartment, house, or land plot, including with a mortgage. It allows you to reclaim tax at the same rates you paid, which is typically 13%. The basic deduction for the purchase is 2 million rubles ($22,200), meaning you can get back 260,000 rubles ($2,900). Additionally, you can separately claim a deduction on mortgage interest up to 3 million rubles ($33,300), refunding up to 390,000 rubles ($4,300). The total maximum refund is 650,000 rubles ($7,200). However, if your annual income exceeds 2.4 million rubles and falls under the progressive scale, the total 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 spread over multiple properties. The interest deduction, however, applies to only one property and also once in a lifetime. So if you are planning an expensive purchase, it is worth calculating in advance what to claim and what to save for the future.

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

For example, if someone buys an apartment with a mortgage for 5 million rubles ($55,600) and pays 1 million rubles ($11,100) in interest, by claiming both the purchase and mortgage deductions on that property, they use up their chance for the maximum deduction. The expert advises weighing the pros and cons if a more expensive mortgage purchase is anticipated. In such a case, you could claim the purchase deduction on the apartment and save the interest deduction for another property.

To confirm expenses for a home purchase, a package of documents is required. This includes the purchase and sale agreement or equity participation agreement (DDD), the acceptance certificate (for new builds) or an extract from the Unified State Register of Real Estate (USRRE) for resale properties, and a payment document (a bank payment order or a note in the contract confirming the seller received the funds, if paid in cash — similar to a receipt).

«To confirm mortgage interest, you need certificates from the bank showing the interest paid each year. Take a certificate every year until the mortgage is paid off. If payment documents are lost, there is a chance to recover them. If it was a bank payment order, contact the bank; they keep records and will issue a duplicate. If you paid cash and lost the receipt, try to contact the seller. But it»s best not to lose such documents,« advises the accountant.

If the property is held as shared ownership, the deduction is distributed proportionally to the shares. But if it is joint ownership, spouses can choose any proportion, including 100% for one of them.

«It is enough to submit an application to the tax office about the distribution of shares between spouses. Write: husband — 100%, wife — 0%, or as you wish. We need to see who benefits more from claiming the deduction,» explains Ekaterina.

If the property includes shares for minor children, parents can use those shares in their deduction, and the children will not lose their right to a refund in the future.

Separately, maternity capital should be mentioned. Its amount is subtracted from the property«s cost when calculating the deduction.

«For example, an apartment costs 4 million rubles ($44,400), bought by two parents in joint ownership and paid for in part with maternity capital (833,000 rubles, $9,300). Then the deduction available is 4 million rubles minus 833,000 rubles = 3,167,000 rubles ($35,200). This is the amount that can be split between the spouses,» Ekaterina illustrates.

However, not all property qualifies for the tax deduction. The key factor 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 a serviced apartment (apartments), as it is considered commercial housing.

Also, no refund is given when buying property from close relatives (spouses, parents, children, siblings) due to the risk of sham transactions or inflated prices. However, you can buy from an uncle or grandmother and file for a tax deduction.

Many mistakenly think they can claim a deduction for a new build immediately after signing the equity participation agreement. In fact, you must wait until the acceptance certificate is signed.

«The apartment must be completed and handed over to the buyer. One of the supporting documents for a new-build deduction is the acceptance certificate. So be careful with the date. If you received the apartment and signed the certificate in December 2025, you can claim the deduction in 2026 (filing a declaration for 2025). If you delayed and signed the certificate in January 2026, the right to the deduction is deferred until 2027. Incidentally, you also cannot reclaim the interest deduction until the acceptance certificate is obtained. You pay the bank, but keep the deduction in mind,» Ekaterina explains.

How to get the refund

There are two ways to receive the payment. The first is a one-time refund to your card. You file a declaration with the Federal Tax Service (FTS), which reviews it and transfers the money. This is the most common method.

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

The second method is to receive the deduction monthly through your employer. In this case, the employer does not withhold personal income tax from your salary until the deduction amount is exhausted. This benefits those who want to see a monthly salary increase rather than waiting for a lump-sum payment.

«First, file an application with the tax office. Then wait for the tax authority to review the application and send a special notice to your employer, and then write an application to your employer. When you receive your salary, the employer will reduce the amount of personal income tax withheld. Until the approved deduction is fully used up, you will receive money without PIT withholding, so your take-home pay will be higher,» describes Ekaterina.

The expert notes that employers usually provide deductions for children or the GTO (Ready for Labor and Defense) program without issue, but property deductions they ask you to handle yourself. However, by law, if you bring a notice from the tax office, they cannot refuse. It just adds extra work for the accountant.