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Taxes on real estate transactions in 2020: how much, when and what’s new

Due to the adoption of new laws, significant changes are expected in the taxation procedure for real estate transactions

In 2020, in Ukraine, sellers and buyers of real estate will still have to pay taxes to the state. This also applies to tenants. What taxes are in real estate transactions in 2020, who is obliged to pay them, and what has changed in the legislation, was found out by the portal “Capital Real Estate”

Taxes on the purchase / sale of real estate in 2020
In 2020, Ukraine will have to pay taxes to both buyers and sellers of real estate. The issue of taxation on real estate transactions is regulated by Art. 167, 172 of the TCU, as well as partially regulated by Art. 173 TCU (the size of the tax base).

Related article: What will change from January 1, 2020 in Ukraine – an increase in taxes, salaries, a living wage and fines

Anna Kovaleva, an expert at the RIYAKO & PARTNERS law firm, named the types and amounts of taxes that the state will have to pay in 2020 for real estate transactions.

What taxes does a property buyer pay in 2020?
the amount of 1% of the price of real estate in the Pension Fund (for residents and non-residents);
state fee in the amount of 1% of the value of the object;
administrative fees for the renewal of ownership in the State Register of Property Rights.
What taxes does a property seller pay in 2020?
if you, as a seller, have owned real estate for less than three years, then you need to pay: state duty (1% of the price of the object specified in the contract, but not lower than its estimated value); income tax (5% of real estate value) and military duty (1.5% of real estate value);
if you own real estate for more than three years and this is your first sale of real estate during the calendar year, then the fee will amount to 1% of the price of the object specified in the contract, but not lower than its estimated value;
if non-resident of Ukraine, you need to pay: state duty (1% of the price of the object specified in the contract, but not lower than its estimated value); personal income tax (15% of the value of the property) and military duty (1.5% of the value of the property).
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What are the new taxes on the sale of real estate in 2020?
At the end of 2019, Ukraine adopted in first reading bill No. 1210 of 08/30/2019, “On Amending the Tax Code of Ukraine regarding the improvement of tax administration, elimination of technical and logical inconsistencies in tax legislation”, which amended Articles 172 of the Tax Code . The law was adopted on first reading.

According to Oleg Dobrovolsky, partner of ID Legal Group, the amendments provide that the income received by an individual from the sale of a second property during the year (for example, 2020) is subject to taxation at a rate of 5%. Income received by an individual from the sale of third and subsequent real estate during the year (for example, 2020) is subject to taxation at a rate of 18%.

“Now bill No. 1210 is presented for second reading. And therefore, in which edition such a bill will be adopted, we will wait for the news, ”the expert says.

Related article: What will happen to the prices of apartments and new buildings in Kiev in 2020: forecast from market experts

Rental Taxes in 2020
According to Article 170.1.5 of Section IV of the Tax Code of Ukraine, the person responsible for accruing and paying tax to the budget is the lessor, who is obliged to do this within the time period established by the Code for the quarterly reporting (tax) period.

Sergey Tarasyuk, Managing Partner of Tarasyuk & Partners JSC, names three legal options for renting real estate by an individual:

On behalf of an individual on a single tax within 100 sq.m. residential and 300 sq. m non-residential, as well as up to 0.2 hectares of land (group 2 or 3, depending on the status of the tenant). Single tax rates for the 2nd group – 944.60 UAH, per month, for the 3rd group – 5% or 3% + VAT. Additionally, a single social contribution is paid in the amount of not less than 1039.06 per month, except for pensioners who are exempt from payment.
On behalf of an individual entrepreneur on a common taxation system. Personal income tax rate on net income: 18% + military fee 1.5%, also a single social contribution on net income, but in the amount of at least 1039.06 per month and recalculated at the end of the year at a rate of 22% of net income and within maximum base 70 845 UAH per month. Reporting is submitted annually, as before.

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