Tax on real estate, residential and non-residential, is a widespread practice in the world for the formation of the state or municipal budget.
In Ukraine, it was planned to start charging it as early as 2012, but the fiscal service began to charge it only in 2015 after a series of reforms. It is worth noting that Ukrainian legislators completely ignored the European experience of taxation with mandatory payments of immovable property. This led to the fact that in 6 years the national taxation system underwent many changes. Maybe we should expect another tax reform in the near future.
For example, in the fall, a new model of real estate tax formation based on assessed value was proposed. Such an innovation has already been criticized, and the bill has been postponed until better times. As they say: "To be continued...". For now, let's try to figure out how things are going with the real estate tax in Ukraine in 2021.
What's wrong with real estate tax in Ukraine?
Remember the fairy tale "The Adventures of Cipollino" about the onion man, in which a tax is imposed on precipitation: for ordinary rain - one hundred lire, for a downpour - two hundred lire, with thunder and lightning - three hundred lire. So, from January 1, 2021, Ukrainians can feel like little onion men and pumpkin grandfathers. The catch is that the owners of real estate (houses, apartments) will have to pay for each extra square meter:
- apartments with an area of more than 60 square meters. m;
- residential building with an area of more than 120 square meters. m;
- various types of real estate with a total area of more than 180 square meters. m.
By the way, the Ukrainian model of taxation is very similar to the fiscal innovation of England in the 17th century: chimneys were taxed in 1660, and windows in 1696. What were the English people doing at the time? And it's very simple: they actively built fake walls that mask chimneys, or bricked up "extra" windows to save money. What can I say here, ingenuity and cleverness are our everything.
Let's end the excursion into history and return to today. By July 1, property owners should have received tax assessment notices, which must be paid within 60 days of receiving the payment. In fact, this is not a tax on real estate, but on luxury. That is why the introduction of such a tax caused a whole wave of expert discussions and citizen dissatisfaction. The Ukrainian real estate tax was based on the incorrect principle of taxing real estate based on its form (number of meters) and not on its economic value.
By the way, there is an interesting discrepancy: most of the objects of the housing stock of Ukraine were built and put into operation during the times of the USSR. And the characteristic features of this period were rather low standards of providing housing for citizens. Accordingly, today the square footage of most apartments owned by Ukrainians rarely exceeds 60 meters.
It turns out that the owners of apartments in a modern new building, the area of which was initially increased, were given away? And the owners of the so-called Khrushchevs, that is, apartments with a small area, can breathe a sigh of relief? No matter what. The total area of the real estate, not the residential area, is taxed. In addition, next year, the real estate tax may be tied to the cost of housing. Even owners of small apartments will pay.
The legislator with an enviable stubbornness does not want not only to inherit, but also to simply notice the absolutely justified and correct norms that exist in developed countries. Roughly speaking, Ukrainians have to pay extra for their desire to live in a normal, spacious apartment. Then a reasonable question arises - the statutory real estate tax applies only to one object, the total area of which exceeds the minimum, or is it about the sum of all real estate objects? Well, we have some bad news for you:
- First, the real estate area is summed up. That is, a Ukrainian who has several small apartments is forced to pay real estate taxes, even if their area does not exceed the established minimum.
- Secondly, not only individual objects, but also parts of real estate objects are taxed.
- Thirdly, if the apartment/house is used by an individual for the purpose of receiving income (for example, it is rented out or used for business activities), then the tax will have to be paid on its entire area.
With such an approach, one should hardly count on the fairness of taxation. The only good news is that the property tax rate is 1,5% and does not burden taxpayers much. Well, let's summarize: you will have to pay. And in order not to pay a penny more than necessary, you should learn to calculate your taxes yourself. By the way, if you are thinking about buying real estate, we recommend that you contact us professional luxury real estate agency THE Capital.
How to pay real estate tax?
As mentioned earlier in the article, Ukrainians will receive taxes on apartments and houses. It is necessary to pay the tax within two months from the date of delivery of the NUR, and malicious non-payers face fines:
- delay in payment for up to 30 days — 10% of the tax amount;
- delay in payment for more than 30 days — 20% of the amount.
The real estate tax rate is up to UAH 70,8. for each "extra" square. And from whom, in fact, is the demand? Based on its nature, real estate tax belongs to property taxes. Therefore, only the owners or co-owners of the real estate, and not the residents of the apartment or house, have to pay.
See also: How to rent a non-residential premises?
It will not be possible to hide the fact of ownership of real estate from the state, since the right to ownership of houses, buildings and other immovable property arises from the moment of state registration. In this regard, the question is: is there a legal way to bypass the payment if your apartment is larger than 60 square meters? The tax is not collected from:
- large families with five or more children;
- orphans;
- religious organizations;
- members of the OOS and their families;
- disabled children.
The so-called "non-object" real estate is also not subject to taxation:
- kindergartens;
- schools;
- public organizations of the disabled.
So, if you are not from a large family, are not disabled or an orphan, then you will have to pay real estate tax. The tax is paid at the location of the taxable object/objects.
Taxes on the purchase and sale of real estate
Buyers and sellers incur considerable costs during the execution of a home sale agreement:
- the buyer and seller each pay 1% of the value apartments, which is specified in the contract (in hryvnias);
- you need to pay additionally for the services of a notary — UAH 3-5 thousand. depending on specialist estimates;
- another 1-2 thousand UAH is paid by the buyer for various extracts from registers.
The amount of taxes on the purchase of real estate can range from several tens to hundreds of thousands of hryvnias and depends on the cost of the apartment. The buyer and the seller usually agree in advance on the distribution of costs for the execution of the agreement. Before the payment operation, the parties are issued by a notary public. In 2021, the Cabinet of Ministers proposed a new real estate tax in Ukraine: when selling or buying a new apartment, you will need to pay a tax of 20%. In this situation, should we expect a sharp rise in housing prices and a fall in the income of developers?
See also: Renting an apartment: how to write an ad correctly?
It's hard to say yet. Some experts do not predict serious growth, others talk about real estate prices rising by 15-20%. The same applies to developers. There is an opinion that many small developers will declare themselves bankrupt. Be that as it may, one thing is certain: neither the current nor the future taxation model will ever be socially just. What can Ukrainians do in the current situation?
First of all, a simple and obvious tip: monitor the direction of the Ukrainian real estate market. Second, resolve any issues related to real estate with professionals. Was the publication interesting and useful? Subscribe to our real estate blog updates and get the latest posts from THE Capital real estate agency.
