Tax on real estate, residential and non-residential, is a common practice in the world for the formation of the state or municipal budget.
In Ukraine, they planned to start collecting it back in 2012, but the fiscal service began to charge it only in 2015 after a series of reforms. It is worth noting that the Ukrainian legislators completely ignored the European experience of imposing mandatory payments on real estate. This led to the fact that in 6 years the national taxation system has undergone many changes. Perhaps in the near future we should expect more tax reforms.
For example, in the fall, a new model for the formation of property tax based on assessed value was proposed. This innovation has already been criticized, and the bill was postponed until better times. As the saying goes: “To be continued…”. In the meantime, let's try to figure out how things are with the property tax in Ukraine in 2021.
What's wrong with property tax in Ukraine?
Remember the tale "The Adventures of Cipollino" about the onion man, in which a tax on precipitation is introduced: for ordinary rain - one hundred lire, for pouring rain - two hundred lire, with thunder and lightning - three hundred lire. So, from January 1, 2021, Ukrainians can feel like the same little onion people 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 sq. m;
- residential building with an area of more than 120 sq. m;
- various types of real estate, with a total area of more than 180 sq. m.
By the way, the Ukrainian taxation model is very similar to the fiscal innovation of England in the 17th century: in 1660, chimneys were taxed, and from 1696 windows. How did the then British get out? It’s very simple: they actively erected false walls to mask chimneys, or bricked up “extra” windows in order to save money. What can I say, resourcefulness and ingenuity are our everything.
Let's finish the digression into history and return to today's days. Before July 1, property owners had to receive a notice of tax assessment, which must be paid within 60 days from the date of receipt of 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 discussions among experts and dissatisfaction among citizens. The Ukrainian real estate tax was based on the initially incorrect principle of taxing real estate based on its form (number of meters), and not on economic value.
By the way, an interesting inconsistency turns out: most of the housing stock in Ukraine was built and put into operation back in the days of the USSR. And the characteristic features of this period were rather low standards for providing housing to citizens. Accordingly, today the 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 \uXNUMXb\uXNUMXbwhich was increased initially, fell under the distribution? And the owners of the so-called Khrushchev, that is, apartments with small footage, can breathe a sigh of relief? No matter how. The tax is levied on the total area of the property, not the residential area. In addition, next year the property tax may be tied to the cost of housing. Even the owners of small apartments will pay.
The legislator, with enviable stubbornness, does not want not only to inherit, but also simply to notice absolutely reasonable and correct norms that exist in developed countries. Roughly speaking, Ukrainians literally have to pay extra for their desire to live in a normal spacious apartment. Then a reasonable question arises - does the statutory real estate tax apply to only one object, the total area of which exceeds the minimum, or is it the sum of all real estate objects? Well, we have some disappointing news for you:
- First, the area of the property is added up. That is, a Ukrainian who has several small apartments is forced to pay taxes on real estate, even if their area does not exceed the established minimum.
- Secondly, not only individual objects are taxed, but also parts of real estate objects.
- Thirdly, if an apartment / house is used by an individual for the purpose of generating income (for example, rented out or used for entrepreneurial activity), then the tax will have to be paid from its entire area.
With this approach, one should hardly count on the fairness of taxation. The only good news is that the real estate tax rate is 1,5% and does not burden payers much. Well, to sum up: you have to pay. And in order not to pay a penny more than necessary, you should learn how to calculate your taxes yourself. By the way, if you are thinking about buying real estate, we recommend that you contact our professional luxury real estate agency THE Capital.
How to pay property tax?
As noted earlier in the article, Ukrainians will receive taxes on apartments and houses... It is necessary to pay tax within two months from the date of delivery of the NUR, and willful 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.
Real estate tax rate - up to 70,8 UAH for each "extra" square. And from whom, in fact, is the demand? By nature, real estate tax refers to property taxes. Therefore, only the owners or co-owners of real estate should pay, and not the tenants of an apartment or house.
Read more:: How to rent out non-residential premises?
It will not be possible to hide the fact of ownership of real estate from the state, since the ownership of buildings, structures and other real estate 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 more than 60 square meters? Tax does not apply to:
- large families with five or more children;
- orphans;
- religious organizations;
- CBO participants and their families;
- disabled children.
Also, the so-called “non-object” real estate is not subject to taxation:
- kindergartens;
- schools;
- public organizations of disabled people.
So, if you are not from a large family, not disabled and not an orphan, then you will have to pay real estate tax. The tax is paid at the location of the object / objects of taxation.
Taxes on the purchase and sale of real estate
Buyers and sellers incur significant costs during the execution of a home purchase and sale transaction:
- the buyer and the seller pay 1% of the cost apartment, which is indicated in the contract (in UAH);
- additionally you need to pay for the services of a notary - 3-5 thousand UAH, depending on the prices of the specialist;
- another 1-2 thousand UAH is paid by the buyer for various extracts from the 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 seller, as a rule, agree in advance on the distribution of transaction costs. Before the transaction, the parties are issued by a notary. 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%. Is it worth it in this situation to expect a sharp rise in housing prices and falling income developers?
Read more:: Renting out an apartment: how to write an ad correctly?
While it is difficult to say. Some experts do not predict serious growth, others say that real estate prices will rise by 15-20%. The same applies to developers. It is believed that many small developers will declare themselves bankrupt. Be that as it may, one thing is certain: neither the current nor the future model of taxation will ever be socially just. What can Ukrainians do in the current situation?
First, a simple and obvious piece of advice: follow the direction in which the Ukrainian real estate market is moving. Secondly, to solve any issues related to real estate with professionals. Was the post interesting and helpful? Subscribe to our updates real estate blog and get the latest publications from the real estate agency THE Capital.
