Taxes on transactions with real estate in Ukraine in 2021 year

Real Estate Expert Alexandr Tsvigun this article will tell you the details of taxation in real estate transactions, relevant in 2020 and 2021 year. You will learn what you need to pay when conducting transactions in this market and how to save money by paying taxes.

IN 2018 year, the total volume of notarial real estate transactions amounted to more than 270 thous. concluded agreements. Compared to 2017 year, dynamics increased by 8,4%. The following 2019 and 2020 years are no exception. Even despite the volatility of the hryvnia and a drop in the rate of housing delivery, the market has added more 6%. Legislators see huge and inexhaustible growth to establish a stable tax base.

The current tax on the purchase and sale of an apartment is not optimal. However, in the current provision of the law, there are subtleties, which will significantly reduce and optimize property tax. How to pay less, what are the key factors to pay attention to? We tell in this article.

Current edition Tax Code of Ukraine (Law 2755-VI) establishes the following taxation regimes:

• Annual tax - the owner must pay for the maintenance of the property;
• Real estate sale and purchase tax - comes into effect from the moment of the conclusion of the notarial transaction and registration in the register of real estate.

On the first point, the owner pays for the so-called. possession of square meters. The tax code introduced a zero rate on real estate, on condition, if the owner owns:

• An apartment with a total area of ​​less than 60 sq. meters;
• Residential building with a total area of ​​more than 120 sq. meters;
• Total ownership of various types of real estate - more 180 sq. meters.

If the standard exceeds the specified values, the taxpayer pays for each "extra" square meter.

The second regime established by the state is the payment of tax upon the implementation of the transaction. The established taxable base consists of:

• Payment of state. duties;
• Income tax;
• Military gathering.

The application of specific rates depends on the implementation period, status of the party to the transaction and the terms of ownership of the property.

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Property purchase tax – what the buyer pays in 2021 year?

When making a deal, the obligation for tax on the purchase of real estate arises from both parties - the buyer and the seller.

The buyer is obliged to pay the following taxes upon buying an apartment:

• State fee in the amount of 1% from the cadastral value of housing;
• The transferred tax to the Pension Fund in the amount of 1% of the transaction amount, concluded by a notary.

For example, the buyer pays the following taxes when buying an apartment:

Apartment cost - 1 million. hryvnia, of which tax payments will be:

• 10 thous. hryvnia should be listed as state. duties (the notary withholds this amount when registering the transaction);
• 10 thous. hryvnia, the buyer pays separately tax to the Pension Fund.

The taxable burden can be reduced for the following categories of buyers of the transaction:

• War veterans, as well as their family members;
• Chernobyl liquidators;
• Faces, who register a deal for the first time.

The last point - an important condition for tax optimization. The party receives an exemption from paying state. duties in the amount 1%. Property can be registered to a family member, who has not previously participated in transactions for the purchase or sale of residential or commercial stock. Father or mother can register ownership of the child. Until reaching the age of majority, the latter is not entitled to dispose of the purchased apartment. The deal can be implemented with the consent of both parents.

The easy way gives savings in 50% from expenses to conclude a notarial agreement.

Related article: How to buy an apartment: real estate expert advice

Tax on the sale of real estate in 2021 year

The taxable base for the seller will be more significant, unlike the buyer. The measure is aimed at that, to make the purchase of housing attractive in new buildings.

When selling real estate, the seller pays 3 tax:

• State. duty at the rate of 1% of the value of the property;
• Personal income tax at the rate of 5% (a non-resident pays a higher income tax rate - 18%);
• Military gathering at the rate of 1,5% from the value of the transaction.

For example, the taxable base for the tax on the sale of an apartment for the seller will be:

The notional cost of the apartment 1 million. hryvnia. The sale of real estate obliges the seller to pay tax in the amount of 10 thous. hryvnia, take into account the income of an individual in the amount of 50 thous. hryvnia, pay additionally a military tax in the amount of 15 thous. UAH. Total, the total value of all taxes will be more than 75 thous. UAH. This is a high enough tax, which will hurt the seller's planned income.

How to reduce tax on the sale of real estate?

The seller can receive preferences only in the payment of duty. There will be no sales tax and military tax. Condition is valid, if more than 3 years have passed since the last transaction for the sale of real estate. Besides, for the specified period, this should be the first sale for the seller.

When selling real estate, other than the above taxes, the seller will incur additional costs - ordering a cadastral plan and a certificate from the BTI, notary fees (when selling real estate, the specified costs are borne solely by the seller).

Taxation when renting real estate in 2021 year

Subjects, who are required to pay tax when renting can be divided into three groups:

• Individual - the owner of real estate (or other authorized person, acting on the basis of a power of attorney);
• FOP acting on general terms of taxation;
• FOP 2 and 3 group.

An individual pays tax when renting an apartment at the rate of personal income tax 18% and military training in 1%. Conditions, upon the occurrence of which it is possible to reduce taxable income no.

FOP on the terms of general taxation, pays income tax in the amount of 18%, plus military tax and pension fund contribution (not less 1 thous. UAH).

Conditions for reducing the burden - the sole proprietor pays tax on income not from the proceeds, but net profit. Consequently, the entrepreneur must provide for all sizes of the maximum deduction from his activities. note, insurance payments and depreciation are not included in the amount of the taxable base.

For FOP 2 and 3 group, the legislator has provided for exceptions:

• 2 group - restriction on the lease of residential and non-residential real estate exceeding 100 and 300 square meters respectively. An entrepreneur does not have the right to lease a land plot for more than 0,2 for sale,;
• 3 group - payment of income tax in the amount of 5% plus additional VAT. Besides, the person transfers to the budget a social contribution in the amount of at least 1 thous. hryvnia per month.

Real Estate Tax Pitfalls in 2021 year

note, donation and transfer transactions for gratuitous use are also taxed. The legislator has expanded the taxable regime - even the inherited property will have to pay all the above tax rates.

but, there are restrictions:

• Inheritance can be obtained from a relative - zero tax rate;
• An increased rate is applied in the amount of 18% NDFL, if the testator or donor is a non-resident (under the conditions of Ukrainian legislation, this is difficult to do - a priori, the owner of real estate automatically becomes a resident, even without being a citizen of Ukraine).

The notary is obliged to notify the tax authorities about the registration of the transaction - all information is updated to calculate the tax base.

The best option to reduce the tax burden is to register housing for minor family members or individuals, with tax benefits. The law does not establish maximum restrictions on the number of square meters for property owners.

note, a minor child can transfer ownership of an apartment to another person. In this case, no tax liability arises. The transaction can be implemented on the basis of a donation agreement or gratuitous use of property.