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Legal News: Real estate in Ukraine: taxation

15 March 2014

Real Estate in Ukraine: Taxes that Arise when a Non-Resident Buys, Owns and Sells Real Estate Property

Any sales agreement on real estate should be notarized. The notary is responsible for all the duties, fees and taxes to be paid when the deal is concluded by individuals. Once the deal has been concluded, the notary registers the new owner's title to the relevant real estate in the State Register, on-line.

The following taxes/fees arise in case of selling or buying real estate (an apartment or a house) in Ukraine by non-resident individuals (some of these are common for non-residents and residents):

Tax: Buying Real Estate                (the same for residents and non-residents)

There are obligatory payments, which shall be paid by parties of a Sales Purchase Agreement (it is agreed by the Parties themselves, which shall take up these payments):

-       State Duty 1 % of the relevant deal value, paid once the agreement has been entered into;

-       Pension Fund fee 1 % of the relevant deal value, paid once the agreement has been entered into.

Tax: Selling Real Estate               

The party which sells the property, pays the Personal Income Tax in the following amount:

Resident:
 - 0% if the period of ownership to the relevant property exceeds three years and it is the first and the only deal on sales within the corresponding calendar year.
 - 5% if the requirements above (the ownership period and the frequency of sales) are not met.
Non-resident:
 - 0% if the period of ownership to the relevant property exceeds three years and it is the first and the only deal on sales within the corresponding calendar year.
 -15-17% (to be calculated based on a certain scale depending on the amount) if the requirements above (the ownership period and frequency of sales) are not met.

Tax: Owning Real Estate             (the same for residents and non-residents)

The owner of real estate shall pay the following tax on it:

For each meter of the respective real estate the owner shall pay from 1 to 2.7% (see the table below) from the minimum wages set forth by the Cabinet of Ministers  of Ukraine - about USD 160 - once per calendar year. There is a privilege to pay Real Estate Tax on property that is not used to generate income. The privilege results in the tax exemption for up to 120 sq m apartments and 250 sq m of private houses (only the living area is considered).

 

Therefore, an owner of an apartment with the total living area of up to 120 sq m and houses with the total living area of up to 240 sq m does not pay the Real Estate Tax. The privilege is applied to only one real estate object, in case the person owns more than one.

 

Table 1. Real Estate Tax Rates

Apartments

Dwelling houses

Living area

Living area

 

to  240 m2

 

Over  240 m2

 

to 500 m2

 

Over 500 m2

 

Up to 1 % of the monthly minimal wage

 

 2,7 % of the monthly minimal wage

 

Up to 1 % of the monthly minimal wage

 

 2,7 % of the monthly minimal wage

 

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