Mortgage refinancing robs the tax deduction
Those wishing to save on mortgages through re-lending should pay attention not only to the interest rate on the loan. The Ministry of Finance explained that, having refinanced, citizens lose the right to a tax deduction on interest paid. This situation is unacceptable, market participants are convinced, and soon the law will be adjusted.
The tax code gives the right to a tax deduction in the amount of expenses for the construction or purchase of residential real estate in the amount of up to 1 million rubles, as well as interest on a loan received for the purchase of this real estate. According to the Central Bank on January 1, the volume of loans for the purchase of housing - 344.2 billion rubles., Of which mortgage loans - 233.9 billion rubles.
In 2005, the volume of mortgage loans tripled, in the past - almost 5 times. Banks find customers not only among those wishing to purchase housing, but also among those who have already purchased it on credit. Previously, rates were higher, now banks are ready for a cheaper loan so that the borrower will pay off the first bank.
When a person builds or buys a house or apartment with borrowed funds, he can deduct interest expenses from taxable income. If he refinances the loan, he is deprived of this right, the letter of the Ministry of Tax and Customs Tariff Policy of the Ministry of Finance says: the right to privilege is canceled, because the new “loan agreement will not have the nature of a targeted loan spent by the taxpayer on the purchase of an apartment”.
In the case of a loan of $ 100,000, obtained 3 years ago for 15 years at 14% per annum, a person will lose the opportunity to save more than $ 10,000, estimates the managing director of the retail unit of the Bank of Moscow Alexander Sherstyukov, to compensate, an additional reduction in the rate will be required, but the cost of reissuing the loan can nullify all the benefits.
The Federal Tax Service does not know how many citizens use tax deductions to compensate interest on mortgages and how much such deductions are. There is no such information from bankers.
“One must be abnormal so as not to use the right to save [on taxes] thousands of dollars. I’m sure that most [borrowers] resort to this opportunity, ”says the curator of mortgage lending in one of the banks.
An insignificant part of the borrowers applies for deductions, the head of the Mortgage Lending block at Alfa Bank Ilya Zibarev objects, and when refinancing, the losses of borrowers are much less: in the first years, most of the payments were made to pay interest, which means you can use a tax deduction.
Interpretation of the Ministry of Finance can be challenged in court, offers partner of the law firm Taxadvisor Dmitry Kostalgin: both loans are associated with a mortgage and the purchase of an apartment.
This loan is no longer associated with the purchase of real estate, but with the repayment of the old loan and with the benefits of savings on interest, the source in the Ministry of Finance does not agree.
In any case, this issue is better settled at the legislative level, Zibarev urges: the spirit of the law coincides with Western practice, and the letter goes against it.
“Formally, the Ministry of Finance seems to be right. But citizens should not be deprived of the right to a tax deduction upon refinancing. Therefore, the parliament should support such amendments, ”said the Chairman of the State Duma Banking Committee Vladislav Reznik.
Only with his
First Deputy Mayor in the Moscow Government Vladimir Resin on TVC promised that the mortgage rate, which is now at least 14% per year, will be reduced to 6-7%, and housing will be sold at almost cost price, not market prices. A source in the construction complex explained that Resin had in mind only a reduction in rates on social mortgages - all waiting lists, as well as young non-waiting families, fall under it. A young family is a couple whose total age does not exceed 70 years.
Vasily KUDINOV, Philip STERKIN
Source: Dengin.ru
The tax code gives the right to a tax deduction in the amount of expenses for the construction or purchase of residential real estate in the amount of up to 1 million rubles, as well as interest on a loan received for the purchase of this real estate. According to the Central Bank on January 1, the volume of loans for the purchase of housing - 344.2 billion rubles., Of which mortgage loans - 233.9 billion rubles.
In 2005, the volume of mortgage loans tripled, in the past - almost 5 times. Banks find customers not only among those wishing to purchase housing, but also among those who have already purchased it on credit. Previously, rates were higher, now banks are ready for a cheaper loan so that the borrower will pay off the first bank.
When a person builds or buys a house or apartment with borrowed funds, he can deduct interest expenses from taxable income. If he refinances the loan, he is deprived of this right, the letter of the Ministry of Tax and Customs Tariff Policy of the Ministry of Finance says: the right to privilege is canceled, because the new “loan agreement will not have the nature of a targeted loan spent by the taxpayer on the purchase of an apartment”.
In the case of a loan of $ 100,000, obtained 3 years ago for 15 years at 14% per annum, a person will lose the opportunity to save more than $ 10,000, estimates the managing director of the retail unit of the Bank of Moscow Alexander Sherstyukov, to compensate, an additional reduction in the rate will be required, but the cost of reissuing the loan can nullify all the benefits.
The Federal Tax Service does not know how many citizens use tax deductions to compensate interest on mortgages and how much such deductions are. There is no such information from bankers.
“One must be abnormal so as not to use the right to save [on taxes] thousands of dollars. I’m sure that most [borrowers] resort to this opportunity, ”says the curator of mortgage lending in one of the banks.
An insignificant part of the borrowers applies for deductions, the head of the Mortgage Lending block at Alfa Bank Ilya Zibarev objects, and when refinancing, the losses of borrowers are much less: in the first years, most of the payments were made to pay interest, which means you can use a tax deduction.
Interpretation of the Ministry of Finance can be challenged in court, offers partner of the law firm Taxadvisor Dmitry Kostalgin: both loans are associated with a mortgage and the purchase of an apartment.
This loan is no longer associated with the purchase of real estate, but with the repayment of the old loan and with the benefits of savings on interest, the source in the Ministry of Finance does not agree.
In any case, this issue is better settled at the legislative level, Zibarev urges: the spirit of the law coincides with Western practice, and the letter goes against it.
“Formally, the Ministry of Finance seems to be right. But citizens should not be deprived of the right to a tax deduction upon refinancing. Therefore, the parliament should support such amendments, ”said the Chairman of the State Duma Banking Committee Vladislav Reznik.
Only with his
First Deputy Mayor in the Moscow Government Vladimir Resin on TVC promised that the mortgage rate, which is now at least 14% per year, will be reduced to 6-7%, and housing will be sold at almost cost price, not market prices. A source in the construction complex explained that Resin had in mind only a reduction in rates on social mortgages - all waiting lists, as well as young non-waiting families, fall under it. A young family is a couple whose total age does not exceed 70 years.
Vasily KUDINOV, Philip STERKIN
Source: Dengin.ru