Tax deductions for mortgages and maintenance of your own home

In some cases, the costs of purchasing a home and its maintenance can be deducted from the tax base. If done correctly, you can save money on taxes legally. What expenses are deductible? Under what conditions can you apply a tax deduction for the costs of purchasing a home, for mortgage payments and for the costs of maintaining your own home in which you live? Find out about it on our website! 

What expenses are deductible?

The following types of expenses are deductible:

• Costs of obtaining a mortgage,
• Interest on mortgage or loan,
• Periodic payments.

Costs of obtaining a mortgage

The deduction is a one-time deduction when you file your return for the year in which you incurred these expenses.

Expenses for:

• Payment for intermediary services and consultations with a mortgage lending specialist,
• Commitment fee (these are payments to the bank or insurer for extending the terms of the loan),
• Notarized mortgage registration,
• Registration of the right to mortgage real estate in the cadastre,
• Payment for appraisal services to obtain a loan,
• Submitting an application to the National Mortgage Guarantee,
• Payment of penalty interest on the loan arising from: early repayment of the loan; transfer of the mortgage to another lender; interest rate adjustment. If penalties are paid in a lump sum, they are deducted when filing your tax return for the year in which they are paid. If the payment of penalties is extended over time due to an increase in the loan rate, then it is deducted in the declarations for those years in which interest on the loan was paid,
• Payment of interest on a new construction loan that was paid between the signing of the preliminary purchase and sale agreement and the signing of the mortgage loan agreement.
• Payment of expenses arising during registration deposit withand for new construction , loan for renovation.

Interest on mortgage or loan

To qualify for a tax deduction on mortgage interest, you must meet two conditions:

1. You use a mortgage or loan to buy the home you live in or to its repair or maintenance . 
2. The loan term is no more than 30 years. 

Periodic payments

Owning real estate involves various periodic payments. In particular, this may be the rent for the land on which your house stands, if you do not own it. Periodic payments associated with owning the home you live in are generally tax deductible.

You cannot subtract:

• Home insurance payments,
• Payments on the loan body,
• Amounts transferred to SEW (separate savings account for mortgage payments).
• Notarial costs for re-registration of the right to rent a home.

Expenses for the home you live in that are not deductible

Not subject to deduction:

• Costs of an intermediary, such as a broker, when purchasing a home,
• Property transfer taxes and VAT,
• Notary costs and cadastral fees under the purchase and sale agreement,
• Current costs of housing maintenance and repairs,
• Interest on that portion of the mortgage loan that was not used to purchase a home,
• Interest and costs on the loan, which in connection with the additional credit schemetovaniya is not a debt to purchase housing,
• Interest on loans you took out to pay deductible interest on loans,
• Costs of obtaining a bank guarantee to pay a deposit when purchasing real estate. 

This is only one of several possible deductions, and there are also tax credits. In order not to make a mistake, it is better entrust the filing of the declaration to professionals!

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