Income tax refund when buying a car in 2021

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Tax deductions are understood as benefits that the state gives to those citizens who buy housing or use certain services - mainly in the field of medicine and education.

Oddly enough, a car is not included in this list, although it often costs more than an apartment and is just as important for a person. But the tax authorities think differently and do not allow personal income tax to be returned when purchasing a car. Such deductions simply do not exist by law.

You can save money only when you sell the vehicle. There are mechanisms in place that allow you to make a deduction when selling cars that have been owned for less than 3 years. Possible savings also depend on the cost of the car.

The purpose of our article is to answer the question of how to return a tax deduction for the purchase of a car and consider ways to reduce the tax base when selling it.

Is there a right to a property deduction when buying a car?

Today, purchasing a personal vehicle is one of the most popular property transactions in Russia. Accordingly, every buyer, after making the purchase, asks a logical question: is it possible to return the deduction for the purchase of a car?

The right to a number of property deductions is established by Article 220 of the Tax Code of the Russian Federation. However, it says nothing about deductions when buying a car in 2016. Moreover: vehicles do not appear directly here. Within the framework of the norms of the Tax Code of the Russian Federation on income tax, they are treated as other property. That is, cars/automobiles are movable property. They are not classified as real estate by law.

The Tax Code does not say how to obtain a tax deduction when buying a car, since the right to such a deduction is not provided.

Thus, no one will be able to receive a tax deduction when buying a car in 2021. Such a right, both previously and now, is not provided for by tax legislation.

Moreover, you cannot also get:

tax deduction when purchasing a new car;
tax deduction when buying a car on credit.

Vehicle purchasers should safely give up the idea that they can get a tax deduction for buying a car. The Ministry of Finance and the Federal Tax Service of Russia proceed from the fact that Article 220 of the Tax Code of the Russian Federation contains a closed list of property deductions. And it cannot be interpreted broadly.

Also see “Sample 3-NDFL for 2021 when selling a car.”

Purchase on credit

The question of whether tax compensation is provided for persons who purchase a car on lease or on a car loan is quite relevant. At the moment, the article of the code regulating the procedure for obtaining a deduction does not contain information regarding transport or other movable property. Based on this, until the adoption of a new law, it is impossible to return the funds spent on tax when buying a car.

The question of whether it is possible to return the tax paid when purchasing a car is relevant for many citizens. Current legislation provides for a number of cases in which it is possible to receive a deduction in the amount of 13% of the value of the property. However, the list only includes real estate properties. Therefore, it is impossible to refund the amount of tax paid when purchasing a car until amendments are made to the tax code.

Declaration

An attempt to file 3-NDFL for the purchase of a car will definitely fail. Tax authorities will simply ignore the 3-NDFL declaration when buying a car in 2016.

Accordingly, it is impossible to provide a sample of filling out 3-NDFL when purchasing a car/machine. There are simply no suitable lines in the form of this declaration to reflect this transaction.

True, in one case, when purchasing a car, the 3-NDFL declaration for 2016 will still be accepted. It is when:

Last year, its sale took place at the same time.
An individual sold his other car (there is a right to a deduction from the sale).

Note that in the latter case, when purchasing a car in 3-NDFL, it will not be declared. Only the sale will be reflected.

Also see “How to fill out the 3-NDFL declaration for the sale of a car.”

justice pro...

Currently, there is a possibility of a 13% return when purchasing property listed in the law. Is the car included in this list? Will it be possible to obtain a tax deduction when buying a car? And if a loan agreement was concluded to purchase a vehicle, in this case, is it possible to return 13 percent from the purchase of the car? We will answer these questions based on clarifications from government agencies and legislative acts, taking into account the latest changes in 2021.

Is it possible to get 13 percent back on a car purchase?

To find out whether it is possible to obtain a tax deduction when buying a car, let’s turn to the current legislation, namely Article 220 of the Tax Code of the Russian Federation, dedicated to property tax deductions. According to paragraphs. 3 p. 1 art. 220 of the Tax Code of the Russian Federation, a taxpayer has the right to receive a property tax deduction in the amount of expenses actually incurred by the taxpayer for:

new construction or acquisition on the territory of the Russian Federation of residential buildings, apartments, rooms or share(s) in them,
acquisition of land plots or share(s) in them.

As we can see, cars do not appear on the list of property, upon purchase of which 13% is returned.

Legal tax deduction for a car

Vehicles are mentioned in Article 220 of the Tax Code of the Russian Federation only in connection with the taxation of income from their sale. Thus, the taxpayer has the right

to receive a property tax deduction for a car (as for other property) “in the amount of income received by the taxpayer in the tax period from the sale of other property (except for securities) that was owned by the taxpayer for less than three years, not exceeding a total of 250,000 rubles” .
instead of receiving the specified tax deduction for a car, reduce the amount of his taxable income by the amount of expenses actually incurred by him and documented in connection with the acquisition of this property.

Therefore, there are currently no tax refunds available for vehicle purchases. The law provides for a tax refund benefit only when purchasing housing.

13 percent refund on car purchase if you took out a loan to purchase the car

The same paragraph 1 of Article 220 of the Tax Code of the Russian Federation provides for a rule that allows for the return of tax on interest paid under a loan agreement concluded in connection with the acquisition of property. However, the condition for receiving the deduction in this case will be the acquisition of only the above-mentioned real estate (Letter of the Ministry of Finance of the Russian Federation dated May 21, 2010 N 03-04-05/9-277).

Thus, neither a tax deduction when buying a car for cash, nor an income tax refund when buying a car using credit funds is currently not provided for by law.

Citizens purchasing a car are wondering whether it is possible to return 13 percent from the purchase of a car

Tax deduction when buying a car: what happens next?

Legislators have tried several times to amend Article 220 of the Tax Code of the Russian Federation, providing for a refund of 13 percent on the purchase of a car.

Thus, in 2021, Bill No. 438680-7 “On Amendments to Article 220 of Part Two of the Tax Code of the Russian Federation” was introduced to the State Duma, according to which it was planned to introduce a tax deduction when purchasing a car by residents of the Far Eastern Federal District when importing a vehicle into the territory of the Russian Federation for personal and family needs. This project was rejected.

Even earlier, amendments to the Tax Code of the Russian Federation were being prepared, which would allow citizens of our country to issue a personal income tax refund when purchasing a domestically produced car. However, this initiative was never implemented.

At the end of February 2021, a bill was introduced into the State Duma (Draft No. 909826-7 dated February 27, 2021), providing for the possibility of obtaining a property tax deduction in the amount of 10% of the amount of expenses for the purchase of a passenger car for personal and family needs, if such expenses do not exceed 1,000,000 rubles.

It is difficult to predict at the moment how events will develop, whether a new law on tax deductions when buying a car will be adopted.

Let's look at a few more questions regarding tax refunds when buying a car.

Is it possible to get 13 percent back from buying a car at a car dealership?

If you bought a new car, for example, from an official dealer or a used car at an auto center, you will also not be able to get back 13 percent from buying a car at a car dealership for cash (on credit).

Is there a tax deduction when buying a car and an apartment?

If you had expensive purchases in the form of an apartment and a car, then you can return 13% only on the costs of purchasing an apartment (no more than the limit established by law), since a 13 percent return from the purchase of a car is not provided for by law.

Is it possible to refund tax on car purchases for pensioners?

The law does not establish any special rules regarding the possibility of obtaining a tax deduction when purchasing a car by pensioners.

Is it possible to get 13 percent back when buying a car second-hand?

If you purchased a car second-hand or at a car dealership, a new car or a used one, domestic or foreign-made, and you want to know how to get back 13 percent of the car purchase, then the answer will be the same - you won’t be able to refund the tax.

From the article you found out whether it is possible to return 13 percent from the purchase of a car - whether a tax deduction is possible when buying a car. According to the current legislation, tax refunds are not provided when purchasing a car, including in cases of purchasing a new car at a car dealership, using a car loan, etc.

Posted by:

Ralenko Anton Andreevich

Moscow 2020

Why can’t you claim a deduction in 3-NDFL when buying a car?

The state has so far given a negative answer to the question of whether 3-NDFL applies to the purchase of a car. There is no deduction allowed, even if the car was purchased for a very small amount. Or vice versa - it costs a lot of money (sometimes more expensive than housing) and thereby gives its owner a certain social and/or professional status.

Thus, when discussing filling out 3-NDFL when buying a car, one cannot draw a direct analogy with real estate purchase transactions. In particular, apartments, rooms, etc. It is believed that by taking ownership of them, a person solves his housing problems. But the same cannot be said about buying a car.

Also see “How to reimburse personal income tax for purchasing an apartment.”

Income tax refund upon sale of a vehicle

To answer the question of whether it is possible to obtain tax benefits when selling a car, you must first determine the period of ownership.

Case 1. You have owned the car for more than three years. You are completely exempt from paying taxes upon sale. There is no need to even file an income tax return.

Case 2: You have owned the car for less than three years. Clause 1 Art. 220 NK offers 3 possible scenarios:

If the price of the car is 250 thousand rubles or less, then when it is sold, a copy of its technical passport (PTS) and the sales agreement are attached to the declaration of Form 3-NDFL. These papers will confirm that the transaction did not exceed the specified amount.
The sale price of the vehicle exceeded 250 thousand, but no documents confirming this were preserved. If the income exceeds the predetermined deduction, then a tax of 13% is imposed on the difference. If the difference is negative, no income tax is paid, but a tax return is filed on a general basis.
The income from the sale exceeded 250 thousand and the necessary documents are on hand. In this case, a person has 2 outcomes - calculate the tax base as the difference between income and the amount of 250 thousand or as the difference between income and the cost of the property sold.

What are the conditions for receiving a tax deduction?

The seller is a Russian citizen and tax resident;
He has documents in his hands that indicate the fact of selling the car (purchase agreement);
There is a copy of the title on hand, which will confirm that the car sold belonged to the taxpayer. It is best to make this copy after the new owner’s details have been entered into the PTS. Then the document will serve as additional evidence of the sale itself.

The return of personal income tax in 2021.

Discussions about the return of tax deductions when purchasing a car have been circulating in the State Duma for a long time.

In 2021, only a refund is available in all of the above cases, for example, when purchasing an apartment, a citizen who regularly pays taxes can return 13% of the amount of the purchased housing, but not more than 260 thousand rubles.

Even if a vehicle is purchased on credit, a person cannot submit documents to the tax office to have part of the expenses reimbursed.

The Tax Code of the Russian Federation contains clarifications that an individual may qualify for payment if he needs:

Pay off interest on a loan issued for the purchase of land or construction of a house.
Buy a house, apartment or share in a residential building.
To purchase a plot for individual housing construction and build a house.

According to the existing norms of the Tax Code, a property deduction is provided only when real estate, houses of different categories and land are listed.

An individual cannot demand a reduction in the tax burden and a refund of part of the funds paid when purchasing a car. For the simple reason that there is no such provision in the law.

But there is a small nuance here. to receive a tax deduction when buying a car on credit or for cash, but it is legally permitted to issue a personal income tax deduction if the car is sold.

In other words, having sold a car, a person can demand the percentage that he paid as tax upon purchase (13%).

To do this, you need to provide the Tax Code of the Russian Federation with documents confirming the purchase and sale transaction for the specified amount of the car.

Tax deduction for an apartment with a mortgage: documents, how to get it.

New provision in tax legislation.

The law exists only in draft form and provides for a tax deduction for the purchase of a domestically produced car.

Thus, deputies of the “A Just Russia” faction want to raise the prestige of the Russian automobile industry and give more people the opportunity to buy a car.

If the amendments to Art. 220 of the Tax Code of the Russian Federation will be adopted, then a relaxation in the form of a 10% discount on the amount spent at a car dealership will be available to the citizen.

Including when purchasing and re-equipping (disabled) a new domestically assembled vehicle.

Conditions:

The car is purchased for personal needs.
The price for it should not exceed 1 million rubles.

In this case, an individual can claim up to 100 thousand rubles, but not more than once every five years, if the old vehicle is replaced with a new one.

When is compensation due when buying a car?

An individual can hope to receive compensation for a purchased car if:

The car was purchased more than 3 years ago. The property deduction is issued to the Federal Tax Service automatically upon the fact and upon presentation by a person of papers confirming the price.
The owner of the vehicle sold the car in the first 1-3 years from the date of purchase and for a lower price than he previously purchased.

In the latter case, the right to receive income tax back is explained by the fact that the person does not receive any profit, only expenses.

And if there is no income, then you don’t need to pay tax.

Who is entitled to a 13% interest refund?

A bill is being considered in the State Duma that proposes introducing a new personal income tax deduction in the amount of 13% of the amount of expenses for purchasing a car. It is assumed that the deduction will be available to citizens who purchased a new (not used) Russian-made passenger car for family or personal needs. The total amount of expenses is strictly up to 1 million rubles. The largest planned deduction amount is 100 thousand rubles.

If the bill is adopted, then taxpayers will be able to return 13 thousand rubles from the budget.

The following rule was also established: if a person took advantage of such a deduction, he will be able to receive it again in the future, but at least 5 years must pass from the date of the previous application for a refund.

This law is attractive to the state in the sense that it will encourage citizens to purchase domestic cars, developing the Russian automobile industry.