The following bills have been submitted to the State Duma for consideration: No. 1136875-8, “On Amending Article 219 of Part Two of the Tax Code of the Russian Federation: Draft Federal Law,” and No. 1141140-8 “On Amending Article 220 of Part Two of the Tax Code of the Russian Federation Regarding the Increase in the Maximum Amounts of Property Tax Deductions for the Purchase of Housing and the Payment of Interest on Targeted Loans (Credits).”
Paragraph 2 of Article 219 of Part Two of the Tax Code of the Russian Federation provides that social tax deductions for expenses related to education, medical treatment, the accumulation of pension savings, and independent assessment of one’s qualifications (with the exception of deductions for the cost of educating the taxpayer’s children and for expensive medical treatment), and for physical education and health services are granted in the amount of actual expenses incurred, but in a total amount not exceeding 150,000 rubles per tax period.
According to the explanatory note, Bill No. 1136875-8 proposes to increase the maximum amount of the social tax deduction from 150,000 rubles to 360,000 rubles. In addition, amendments are being made to Article 219 of Part Two of the Tax Code of the Russian Federation, providing for social payments for citizens’ expenses related to children’s recreation and health improvement.
Draft Federal Law No. 1141140-8 provides for an increase in the maximum property tax deduction for personal income tax on the purchase (construction) of residential properties from 2,000,000 rubles to 8,000,000 rubles, as well as an increase in the maximum deduction for interest paid on targeted loans (borrowings) for the purchase (construction) of housing, from 3,000,000 rubles to 6,000,000 rubles, by amending subparagraph 1 of paragraph 3 and paragraph 4 of Article 220 of Part Two of the Tax Code of the Russian Federation.
As the authors of the bill note, the proposed changes are necessary because the current limits on property tax deductions under Article 220 of the Tax Code of the Russian Federation do not reflect the actual costs citizens incur when purchasing housing under current economic conditions. With the current expense limit of 2,000,000 rubles, the maximum personal income tax refund amounts to 260,000 rubles at a rate of 13 percent, and for interest, with a limit of 3,000,000 rubles, it amounts to 390,000 rubles. These figures were established under different price conditions and, with the rise in housing costs, have lost their incentive and socially significant effect.
The draft laws include provisions for entry into force on January 1, 2027, and for the application of the new limits to legal relationships arising after that date, which provides legal certainty for taxpayers and tax authorities.
Author
Dmitriy Kovalev
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