What taxes and costs when buying an apartment in a new building in Ukraine
Legal advice on the payment of taxes and their amounts when concluding investment or assignment agreements
The purchase of an apartment in a new building is accompanied by the conclusion of an investment agreement or an assignment agreement. The future homeowner wonders how much and how taxes are when buying an apartment in a new building.
The lawyer of Pervaya Realtor Group Corporation Maxim Chepelenko specifically for the capital real estate portal 100realty.ua explained the procedure for paying taxes when concluding investment agreements, assignment agreements, and also explained who is the tax agent for such transactions. The expert talks about the additional costs when buying an apartment in a new building.
How to pay taxes when concluding an investment contract
An investment agreement means any agreement that is concluded with the aim of investing in the construction of real estate.
An individual does not have any obligation to pay taxes, regardless of the investment scheme, since the investor does not receive income. In schemes where the investment contract is notarised (a preliminary contract, sometimes a contract of sale of property rights), the developer imposes on the buyer the obligation to pay the costs associated with the notarization of the contract (approximately 1% of the contract price).
Related article: Buying an apartment in a new building for resale: how much you can earn
When concluding an agreement on participation in the construction financing fund, the investor, in addition to the price of the investment object, also pays a fee to the manager of the construction financing fund (included in the total cost of the property) and can make up to 5% of the price of the investment object.
How to pay taxes when reselling an apartment in a new building
When registering the right of ownership of real estate in a new building (regardless of putting the house into operation), the transfer of rights to the invested property is carried out through the conclusion of an agreement on the transfer of the right of claim (an agreement is also used to replace the parties to the obligation, the assignment agreement, etc.) The tax payer in this case is the investor who alienates the rights under the investment agreement and receives profit for it.
In the future, he is obliged to submit a tax return on property status and income by May 1 of the next year, and by August 1 of the next year, he must pay the tax obligation specified in the declaration on his own.
The tax rate for the assignment of rights and obligations under an agreement on participation in the construction financing fund is 18% (individual income tax) and 1.5% military duty for the positive difference between the price of the investment agreement and the actual funds received.
Related article: How to privatize an apartment or a dormitory room in Ukraine for free: a list of documents and a sample application for housing privatization
The tax rate for assignment under other investment schemes is the general – 18% of personal income tax and 1.5% of the military duty from the tax base – the total amount of funds received by the investor for the assignment of the right to claim.
When paying 1.5% of the military duty, the exact dates are not established by the legislation, however, it is recommended to adhere to the provisions of the legislation on the payment of personal income tax.
Pay attention to the terms of the investment agreement: many agreements provide for the obligation of the buyer of the home (investor) to pay additional funds to the developer for the assignment of rights. The amount of surcharge can reach up to 5% of the contract price. Investment agreements provide for exemption from additional payments to the developer upon transfer to family members.
What are the taxes when reselling an apartment in a new building after commissioning
After registration of ownership of the property (takes place exclusively after putting the house into operation and assigning it a mailing address), the transfer of rights to the investment object is carried out by concluding a regular contract of sale of real estate.
Related article: Fake real estate documents: how to understand that not everything is clean with documents
When concluding a contract of sale of residential real estate, the following mandatory costs arise:
1. Personal income tax. The income from the sale of a property is determined on the basis of the price specified in the contract of sale, but not lower than the estimated value of such. The tax rate for citizens of Ukraine is 5%, for a non-resident – 18%.
Both residents and non-residents are exempted from personal income tax while paying the following conditions:
the person received income from the sale (exchange) no more than once during the reporting year;
the object of sale is residential property;
the property has been owned by the taxpayer for more than 3 years (except for property received by inheritance).
Personal income tax paid to a notary