Re-registration of rights to real estate is always accompanied by a rather significant number and amount of mandatory payments. Anyone who has decided to sell, donate real estate or plans to inherit the property is interested in what costs in this regard he will bear. Taxes and charges in such transactions depend on several factors. Let’s find out.
Everyone think that any operation of an apartment or a house will incur huge costs. However, is this really true? And in which cases are there almost no taxes, and when, on the contrary, have to pay a decent amount?
Final consultation on the taxation of a particular transaction (sale or gift) is best obtained from a notary. And it is the one who will draw up the documents.
This is due to the fact that in practice the transaction costs of different notaries can vary significantly. However, some basic things can and should be solved in advance by yourself.
Services of appraisers and notaries
In addition to the taxes and fees (income tax, military fee, payment to the Pension Fund) the parties to the transaction also bear the associated costs, namely:
- Notary services for registration and registration of documents. It is this article of costs may differ significantly at each particular notary. Therefore, many people, before signing documents on the sale or gift of real estate go with the documents to several different notaries and are interested in the price of the question. And after that, choose the liked specialist, based on the price of services and the overall impression of the office and the quality of service. After all, if the staff of the notary office from the very beginning behaves rudely towards the potential client, and the office itself is a mess, then with the quality of paperwork can be a problem.
We know of a significant number of stories, both of random typos and of professional mistakes in the drafting of treaties. It is clear that such missteps can subsequently cause problems and at least take a lot of time and nerves to correct them. Therefore, to choose a notary for the re-registration of the property you need to be very responsible.
- Evaluation of real estate. This procedure is necessary in order to determine the so-called tax base for re-registration of real estate. It is from the value of the estimated value, which will determine the appraiser, the taxes and fees depend which will be paid to the notary. It is understandable that all sellers and buyers are interested in minimizing the value of the property and, accordingly, paying less taxes. However, it is not technically possible to significantly underestimate the expert estimate. According to relatively new real estate valuation rules, the estimated value should be within a plus or minus 25% of the so-called «register value», determined by a special state «assessment module» on the website of the State Property Fund of Ukraine.
The services themselves are relatively inexpensive and can be found in advance in the sections of the site about apartment evaluation, houses, non-residential premises or land plots. Appraisal companies with a decent reputation try to place all their tariffs on the home page of the website. So that the client knows in advance the cost of services, and in the process of work did not appear any additional payments and other unpleasant «surprises».
So the notary was chosen, the appraisal company we chosen as well, property valuation we have made. What are our further costs?
Income tax, military fee, Pension Fund
Registration of real estate in Ukraine is accompanied by mandatory payment of such taxes and fees:
- Income tax – PIT. As with all other payments, the rate (size) of this tax depends on such factors:
- Legal scheme of re-registration of real estate. The most common types are the conclusion of contracts of sale or gift, less often – contract of exchange (exchange). Registration of rights upon succession to real estate occupies a separate place.
- Term of ownership. The amount of income tax, among other factors, depends on how much the current owner owns the property. If more than three years, the tax may in some cases be absent. All this will be shown in the table below.
- Re-registration of property between relatives. There may be no taxes at all for the donation of real estate to next of kin or their inheritance. The closest relatives (first and second degree of kinship) in Ukraine are: husband-wife, children-parents, grandgrandchildren-grandparents, siblings.
- Ukrainian passport. If at least one of the parties to a real estate transaction or transaction is a foreigner, the cost of such a procedure increases significantly due to high income tax.
- Military fee. This fee is present in almost all types of registration of real estate. The only exception is the re-registration of the property to the next of kin.
- Pension Fund. Unlike other taxes and fees, payments to the Pension Fund are withheld only in transactions of purchase and sale of real estate. This type of expenditure is not available for donation or inheritance.
As you can see, there is nothing particularly difficult in the principles of taxation during the re-registration operations. Taxes and fees are only three. And the factors that affect the size of these costs are also few. For complete clarity, you just need to describe all the situations described in a simple table. That’s what we’re gonna do. Recall that the percentages shown in the table are taken from the value of the property obtained as a result of its expert evaluation.
All participants in the re-registration of real estate – citizens of Ukraine.
| All parties of the contract – citizens of Ukraine | |||
|---|---|---|---|
| Operation | Income tax | Military fee | Pension fund |
| Sell of residential property (in the ownership more then 3 years), there were no other transactions with his real estate during the year | — | — | 1% (buyer expenses) |
| Sell of residential property in the ownership less then 3 years or this is the second sale of real estate for the current calendar year | 5% (seller expenses) | 1,5% (seller expenses) | 1% (buyer expenses) |
| Sell of premises, buildings, garages | 5% (seller expenses) | 1,5% (seller expenses) | 1% (buyer expenses) |
| Gifting or inheritance to close relatives (spouses, children, grandchildren, siblings) | — | — | — |
| Gifting or inheritance except close relatives | 5% (new owner pays) | 1,5% (new owner pays) | — |
At least one participant is a foreigner.
| A foreigner participates in the re-registration of real estate | |||
|---|---|---|---|
| Operation | Income tax | Military fee | Пенсионный фонд |
| Sale of residential property | 18% (seller expenses) | 1,5% (seller expenses) | 1% (buyer expenses) |
| Sell of premises, buildings, garages | 18% (seller expenses) | 1,5% (seller expenses) | 1% (buyer expenses) |
| Gifting or inheritance | 18% (new owner pays) | 1,5% (new owner pays) | — |
PIT for multi-object sales (exchange)
Notary Chamber of Ukraine has updated the table regarding the procedure of taxation on the income of individuals transactions for the sale (exchange) of real estate.
Sales are counted for one calendar year for each category of property separately, taking into account the following features. Selling inherited objects is considered separate (in total for 1 and 3 rows of the table) regardless of the type of object.
| Name of the real estate | Sale of one object | Sale of second object | Sale of the third and following objects | |||
|---|---|---|---|---|---|---|
| Inherited | Acquired by other way | Acquired by way of inheritance | Acquired by other way | Acquired by way of inheritance | Acquired by other way | |
Owned for MORE THAN 3 YEARS or INHERITED:
| Is exempt from | Is exempt from | Is exempt from | 5% | 5% | 18%* |
| 5% | 18%* | 18%* | 18%* | 18%* | 18%* |
| Other real estate: (immovable property not specified in the paragraphs above or specified in paragraph 1 but not inherited and owned for less than three years) | Is exempt from | 5% | Не облагается | 18%* | 5% | 18%* |
Notes:
* Income may be reduced by documented expenditure.
** To exempt from taxation income on the sale (exchange) of agricultural plots of inheritance, The notary additionally determines the ownership of the inherited land parcel to the state and communal agricultural enterprises, institutions and organizations acquired in the process of land privatization; used by such a testator; allocated in kind (on the ground) to the owner of the land share (unit).
The tax position on the taxation of one or two real estate objects, which were received by natural persons by inheritance, is included in this publication: https://zak.tax.gov.ua/media-ark/news-ark/print-569915.html But it says as if the tax officers specifically wanted to confuse people with this explanation.
It is clear that in fact there is nothing complicated and complicated with taxes and fees when re-registration of real estate in Ukraine. Of course, if you are not a lawyer and read the Tax Code, you will get confused almost guaranteed. 🙂 If all costs and tax rates are «compartmentalized», everything becomes immediately very clear.
We hope that our article was useful. Well, when you need expert evaluation of the property – we are at your service!
