It is not advisable to close an individual investment account for at least three years. Only after this period expires, the investor will receive a tax deduction. Many owners of these accounts know about this, but about the expediency closing IIS after 3 years its use is not known to everyone.
How best to withdraw money from IIS after 3 years
The maximum term of ownership of IIS is not spelled out in the legislation. This suggests that you can use the IIS for an unlimited time. Thus, it is worthwhile for an investor to study this issue carefully. Perhaps someone will reconsider their decision to close an individual investment account after the expiration of a three-year period.
The legislation correctly describes all the rules for using the IIS, as well as the rules for terminating the contract, if three years have not passed since its opening. Immediately after closing an individual investment account, the investor loses the opportunity to receive a tax deduction. This is spelled out in the Tax Code of the Russian Federation, or rather in the following points: sub. 4 p. 3 art. 219.1, sub. 1 p. 4 art. 219.1.
In this case, the tax deduction received during use will have to be returned. In addition, the investor will have to pay off the interest. If a tax deduction of type B was chosen when opening an account, then all income received from conducting investment activities will be taxed with personal income tax. Having figured out what awaits the owners of IIS in case of early termination of the contract, you can consider options when deciding to terminate the contract after the expiration of this period.
Why close IIS in 3 years – is it necessary to do it at all
The legislation limits only the minimum period for using IIS – three years. The maximum time for holding this type of brokerage account is not limited. This fact suggests that after the completion of the three-year period, the investor has the opportunity to continue investing and enjoy the benefits. In addition, the account can already be closed at any time without losing the right to receive a tax deduction. Let us remind you that this applies only to those individual investment accounts that have already existed for three years.
With the help of an individual investment account, investors can receive a higher income in comparison with bank deposits. When choosing a tax deduction of type A, the maximum amount of refunded tax will be 52 thousand rubles per year. However, the amount of payments may change if the investor paid personal income tax at a rate of 13% less than 400 thousand rubles. Even if you buy OFZ on IIA, the income from these securities, combined with the tax deduction, will exceed the potential profit from the bank deposit. Also, after the expiration of a three-year period, an investor can close an individual investment account at any time.
The tax on income from investment activities will not be withheld throughout the entire period of using the IIA. Exceptions to this rule are dividends and coupons. All received profits can be used for reinvestment. Thanks to this tactic, the money will not be “dead weight” but will continue to work. Recall that when choosing a tax deduction of type A, you will have to pay tax on profit from investment activities.
If a minus is formed during the use of IIS, then it will not be written off or transferred. The absence of the expected profit on the IMS should not be the reason for the termination of the contract. This is due to the fact that the loss that appears on the individual investment account is not transferred to other investor accounts and is not deducted from future profit.
Whether or not to close IIS after three (3) years from enrollment to withdrawal – what to do
Investor’s desire to change the type of tax deduction. Using IIS, you can choose only one type of tax benefit. If the investor decides to receive a deduction for the personal income tax paid by him when opening an account, then this benefit will be valid for all three years. Until 2017, the maximum amount of replenishment of the IIS balance during the year was less than 1 million rubles. After increasing this limit, incomes also increased. As a result, the decision to receive a deduction from the profit seems to be expedient. However, before terminating the contract, it is worthwhile to carefully study which will be more profitable: pay income and receive 52 thousand rubles annually, or inform future income from investment activities from taxes.
Achievement of the set investment goals. As soon as the investor earns the desired amount in the financial markets, the IIA can be closed. This is a perfectly logical reason for terminating the contract.
The ability to reinvest funds and increase profits minus. By closing an individual investment account. the investor will be given the entire amount on the balance sheet of the IIA. If, when opening an account, a type A tax benefit was chosen, then you will have to pay tax on the investment activity received. After termination of the agreement, the investor has the opportunity to open a new individual investment account and replenish it with the available funds.
- An illustrative example can be given for the last argument:
- In 2014, investor Ivanov opened IIS.
- Over the next three years (2014-2016), he replenished the account balance in the amount of 130 thousand rubles annually.
- Every year they applied for a deduction from contributions, having received 169 thousand rubles in their hands. As a result, for the reporting period, they received a refund in the amount of 50,700 rubles.
- Three years later, Ivanov terminates the contract and receives 390 thousand rubles in his hands. In the new, 2017, he opens a new individual investment account, replenishing his balance with the amount received from the previous IIS – 390 thousand rubles. A year later, the investor applies for a deduction from contributions and already receives 50,700 rubles.
You can clearly trace all the described actions using Fig. 2.
If the closure of the IIS after 3 years is profitable, then it is worth doing. After that, the money received can be reinvested and get big profits.
Having carefully studied the above scheme, you will notice that after the termination of the contract for maintaining an individual investment account after three years, it will be more profitable than continuing to use the old account.