19.08.08

The Deputy Head of the Duma Budget Committee has introduced amendments to the Tax Code with new provisions for reimbursing funds from the budget for property purchases. The amendments will be considered in the fall of this year.

Currently, the buyer can use the price of a purchased apartment as a deduction from his earned income for tax purposes. The deduction is limited to a maximum of 1 million rubles and up to 130,000 rubles may be reimbursed by the state. The deduction may also include interest payments on purchased property. However, if a loan is refinanced, the buyer loses his right to deduct the interest payments. And if the new loan’s interest 25 percent or more lower than Central Bank’s refinance rate, a profit tax of 35 percent must be paid on the difference. The proposed amendments suggest preserving the buyer's tax deduction in the event of refinancing and omitting the tax on the difference between the rates.

In the past, refinancing of mortgage loans was widely popular but during the last 6 months banks have raised credit rates to match mortgage rates – on average to 12.5-14 percent on ruble loans, and refinancing is no longer profitable.

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Source: "Ведомости"